Lengthy Monthly Backup Retention

I have a customer who wants to store monthly backups for 3 years. This customer backs up via Internet only so they are set to do incremental backups only. My question is if I select Jan 1, Dec 1, Feb 1, etc to be archived, do those archives only contain what was backed up in the incremental backup for that day or will it also include all files that were in the original full backup that was ran the first day I set it up?

Initial backup containing all files >> 30 days of incremental >> Archive the 31st day. Does this archive contain the initial data and the 30 days of incremental even if they get deleted to make room for more incrementals, plus the archive data from day 31? Eventually the 30 days of backup prior to the archived one would get deleted but since I archived on day 31 are those changes merged into the archive?

Does it make more sense to set Maximal number of incremental file backups to 1095 (3 years)? Is there a limit on this number and does it affect performance of the server or client in some way?

Thanks in advance and I hope this makes sense to you.

If you archive a backup, it will contain all of the files backed up from that day. It would be the same as archiving a full file backup.