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Which Financial Documents Should You Keep on File and for How Long?


You might be surprised how many people have financial documents scattered all over the house—on the kitchen table, underneath old newspapers, in the hall closet, in the basement. If this describes your financial “filing system,” you may have a tough time keeping tabs on your financial life. Take an hour or two to put things in good order. If nothing else, do it for your heirs. When you pass, they will be contending with emotions and won’t want to search through your house for this or that piece of paper. Here are some documents you should keep:

  • Investment statements – Organize them by type: IRA statements, 401(k) statements, mutual fund statements. The annual statements are the ones that really matter; you may decide to forego filing the quarterlies or monthlies. When it comes to your IRA or 401(k), is it wise to retain your Form 8606s (which report nondeductible contributions to traditional IRAs), your Form 5498s (the “Fair Market Value Information” statements that your IRA custodian sends you each May), and your Form 1099-Rs (which report IRA income distributions).1 In addition, you will want to retain any record of your original investment in a fund or a stock. (This will help you determine capital gains or losses. Your annual statement will show you the dividend or capital gains distribution.)
  • Bank statements – If you have any fear of being audited, keep at least the last three years worth of them on file.
  • Credit card statements – These are not as necessary to have around as most people may think, but you might want to keep any statements detailing tax-related purchases for up to seven years.
  • Mortgage documents, mortgage statements and home equity line of credit (HELOC) statements – For your mortgage documents, you may wish to keep them for the ownership period of the property plus ten years.
  • Federal and state tax returns – You need to keep three years of federal (and state) tax records on hand, and up to seven years to be really safe. Tax records pertaining to real property or “real assets” should be kept for as long as you own the asset (and for at least seven years after you sell, exchange or liquidate it).2
  • Employee benefits statements – Keep at least the most recent yearend statement on file.
  • Insurance – Life, disability, health, auto, home—you want the policies on file.
  • Medical records and health insurance – The consensus says you should keep these documents around for five years after the surgery or the end of treatment. If you think you can claim medical expenses on your federal return, keep them for seven years.

If this seems like too much paper to file, scan financial records and put them on your computer. You might want to have the hard copies on file just in case your hard drive and/or your flash drive go awry.

 

1Source: blog.oregonlive.com/finance/2011/05/why_you_might_want_to_save_for.html (5/21/11)
2Source: irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-long-should-I-keep-records%3F (12/31/12)

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