How to Create a Retention Policy for Exchange Online Mailbox

Email retention management is important for compliance reasons, efficient storage, and overall data lifecycle management. Exchange Online retention policy allows for automatic email retention, archiving, or deletion with the help of retention tags and Messaging Records Management (MRM).

Even though Microsoft suggests using Microsoft Purview retention policies and retention labels for organization-wide data governance, MRM retention policies in Exchange Online remain a feature and are often used for moving emails to archive mailboxes. This article provides detailed steps on how to set up a retention policy in Exchange Online mailboxes.

What is a Retention Policy in Exchange Online

A retention policy in Exchange Online is a set of retention tags that determine the actions to be taken to mailbox content after a certain period of time.

Depending on the configuration, a retention policy may:

• Retain emails automatically for a certain period of time
• Archive emails into an archive mailbox
• Delete emails, but allow for their recovery
• Delete emails permanently after expiration of the retention period
• Provide users with personal settings for retention using personal tags

Retention policies help companies achieve regulatory and internal requirements regarding compliance issues without the need for manually cleaning up mailboxes.

Prerequisites For Creating a Retention Policy in Exchange Online

Before you start working on creating a retention policy in Exchange Online, ensure that you have met the following prerequisites:

• You have MRM permissions.
• The mailboxes are located on Exchange Online (Microsoft 365).
• You have access to the Microsoft Purview portal.
• Creation of retention tags and policies is carried out in Microsoft Purview > Data Lifecycle Management > Exchange (Legacy).

The whole process will take about 30 minutes.

Step 1: Create a Retention Tag

A retention tag defines what action Exchange Online should take on mailbox items and when.

A) Open Microsoft Purview

Sign in to Microsoft Purview and navigate to:

Solutions → Data lifecycle management → Exchange (Legacy) → MRM Retention Tags

Click + New Tag.

B) Choose How the Tag Will Be Applied

Exchange Online provides three different tag types.

Option 1: Automatically to Entire Mailbox (Default)

Choose this option to create a Default Policy Tag (DPT).

A DPT applies to the entire mailbox and can:

• Delete all mailbox items after a specified period
• Move all mailbox items to the archive mailbox

Note: This option cannot be used to create a DPT specifically for deleting voicemail messages.

Option 2: Automatically to Default Folder

Choose this option to create a Retention Policy Tag (RPT).

This applies only to a specific default folder such as Inbox and Deleted Items.

You can easily create RPTs with any of these actions:

• Delete and Allow Recovery
• Permanently Delete

Option 3: By Users to Items and Folders (Personal)

Create a Personal Tag if you want Outlook or Outlook on the web (formerly known as Outlook Web App. or OWA) users to manually assign different retention settings to individual emails or folders.

This provides users with more flexibility than mailbox-wide policies.

Click Next after selecting the desired tag type.

C) Configure Retention Settings

Next, configure how long Exchange Online should retain mailbox items.

Retention Period

You have two options:

1. When the item reaches the following age (in days)

Specify the number of days before Exchange performs the configured action.

For most items, retention age starts from:

• Date received
• Date created

For Calendar and Task items, retention starts from the item’s end date.

2. Never

Choose this option if the items should never be deleted or archived automatically.

D) Choose the Retention Action

Select what Exchange Online should do after the retention period expires.

1. Delete and Allow Recovery

Emails are deleted but remain recoverable through the Recover Deleted Items feature until the mailbox retention period expires.

2. Permanently Delete

The message is permanently removed from the mailbox database.

Important: If the mailbox is under Litigation Hold, Microsoft 365 retention policies, or retention labels, the item is preserved for compliance and remains discoverable through eDiscovery even if a permanent deletion policy exists.

3. Move Item to Archive

Available only for:

• Default Policy Tags (DPT)
• Personal Tags

This automatically moves emails to the user’s archive mailbox.

E) Name the Retention Tag

Provide:

• Tag Name
• Optional Description

The tag name appears in Outlook and Outlook on the web for personal tags.

Review your settings and click Submit to create the retention tag.

Create Retention Tags Using PowerShell

Administrators can also create retention tags using the New-RetentionPolicyTag cmdlet.

Common examples include:

• Default policy tag that deletes messages after seven years
• Archive policy that moves emails after two years
• Voicemail deletion policy
• Junk Email folder cleanup policy
• Personal tag that never deletes emails

PowerShell is especially useful for bulk administration and automation.

Step 2: Create a Retention Policy

After creating retention tags, the next step is creating an Exchange Online retention policy.

Navigate to:

Microsoft Purview → Solutions → Data Lifecycle Management → Exchange (Legacy) → MRM Retention Policies

Click New Policy.

A) Configure the Policy

Enter a name for the policy.

Click Add Tag and select the retention tags you created earlier.

A retention policy can include:

• One Default Policy Tag with the Move item to archive action.
• One Default Policy Tag with the Delete and allow recovery or Permanently delete actions.
• One Default Policy Tag for voice mail messages with the Delete and allow recovery or Permanently delete actions.
• One Retention Policy Tag for each default folder, such as Inbox, to delete items.
• Multiple Personal Tags

Microsoft recommends limiting the number of personal tags (ideally no more than ten) to avoid confusing users.

Review the configuration and create the policy. You can also create a retention policy without adding any tags initially. However, no retention or archive actions will occur until tags are added later.

B) Create a Retention Policy Using PowerShell

Retention policies can be created through the New-RetentionPolicy command of Exchange administrators.

It brings all the tags under one mailbox policy which can then be applied to the user.

PowerShell is used in most cases for the deployment of retention policies in large scale Microsoft 365 organizations.

Step 3: Assign Retention Policy to Mailbox Users

Creation of a policy doesn’t enforce it.

In order for the policy to be enforced, the user should be assigned with the retention policy.

Each department or business unit can be assigned a retention policy depending on the organizational requirement.

Then Exchange Online starts managing the mailbox according to the policy settings you have created.

Exchange Online Retention Policies Best Practices

For successful implementation:

• Use Microsoft Purview retention policies for organizational data lifecycle management.
• Continue using MRM retention policies for mailbox archiving.
• Maintain personal retention tags in moderation.
• Test retention policies on pilot users prior to organizational roll-out.
• Keep track of retention periods for compliance purposes.

Perform mailbox processing verification after deployment by using the Managed Folder Assistant.

Frequently Asked Questions

1. What is a retention policy in Exchange Online?

A retention policy consists of retention tags that automatically retain, archive or delete emails from mailboxes following specific settings defined by an administrator.

2. What is the distinction between a retention tag and a retention policy?

A retention tag indicates how a message should be handled and when, whereas a retention policy combines one or several retention tags and then assigns these tags to mailbox users.

3. Is there any recommendation for applying MRM retention policies by Microsoft?

It is recommended by Microsoft to use Microsoft Purview retention policies and retention labels for managing Microsoft 365 data lifecycle management. Yet, MRM retention policies are still supported and widely used for moving emails to archives.

4. Can Litigation Hold override retention policies?

Yes. If a mailbox has an active Litigation Hold or it is protected by Microsoft Purview retention policies/labels, emails will stay preserved and accessible through eDiscovery despite permanent deletion of the email as indicated by an MRM policy.

5. How much time will be needed for the policy to start working?

Retention policies are implemented with the help of a Managed Folder Assistant. The timing varies, but administrators can manually trigger processing using the Start-ManagedFolderAssistant PowerShell cmdlet for testing purposes.

6. Can I apply different retention policies to different users?

Yes. Exchange Online allows administrators to assign different retention policies to different mailboxes, departments, or user groups based on business or compliance requirements.