Office 365 online archiving and retention policies.

Each Office 365 email enabled account features an Online Archive mailbox. An archive mailbox is a specialised mailbox that appears alongside the user's primary mailbox folders in Outlook, or Outlook on the web.

Users can access the archive in the same way that they access their primary mailboxes.

Features of the Online Archive mailbox:

Messages can be moved to the archive automatically or manually.
The Online Archive mailbox is easily accessible through Outlook on the web, and Microsoft Outlook.
Messages in the archive mailbox are easily searchable and viewable from any location.

Moving messages to the Online Archive mailbox:
Users can move email items from the primary mailbox to the archive mailbox manually or automatically using Archive Policies to reduce the size of the primary mailbox.

Setting up an Archive Policy using Microsoft Outlook:

In the left panel, click the custom created folder to which you want to assign an archive policy. (In the screenshot below, this is the "Example folder").
From the Outlook Ribbon, click the Folder tab.
From the Folder tab, click the Policy button.
The chosen folder Properties dialogue box appears, open on the Policy tab.
From the Online Archive dropdown menu, click on the archive policy you wish to apply. Choose from one of the following options. Move items (from your personal mailbox) to the Archive when older than:

Use Parent Folder Policy (2 years) --> Default Retention Policy.
1 year.
5 years.
Never.

Setting up an Archive Policy using Outlook on the web:

Login to your Outlook on the web account.
In the list of Folders in the left panel, right-click the custom created folder to which you want to assign an archive policy.
From the dropdown menu that appears, select Assign policy, to open a second dropdown menu, Archive policy.
From the Archive policy dropdown menu, choose the archive policy you wish to apply. Choose from one of the following options. Move items (from your personal mailbox) to the Archive when older than:

Personal 1 year move to archive (1 year).
Personal 5 year move to archive (5 year).
Personal never move to archive (Never).
Use parent folder policy -- > Default Retention Policy.