Which Documents Do I Keep and How Long?

I’ve lost count of how many people we’ve helped sort through mounds of documents gathered from the nooks and crannies of their home. Fearful of tossing anything “important”, paperwork accumulates on kitchen tables, gets stuffed in drawers (especially when company is coming over), or stashed in boxes under the bed. Good record keeping is vital to lowering stress and maintaining a healthy financial household. And if you won’t do it for yourself, consider your heirs! The search for documents that are hard to find can cause untold frustration and even worse, delays in a timely settlement of an Estate. So where do you begin?

First, prep your storage area and sort by types of documents. If you want to really streamline, sign up for online account access, purchase a quality scanner, and store records on your computer. If you go paperless, it is very important to have a good backup protocol with encrypted cloud storage or systematic backup to another device. I set up my electronic files to mirror my old filing system. File cabinets still work, too, so choose the system you will actually use.

Before sharing some general guidelines I use to determine what should be filed and for how long, please know that these are general guidelines. Check with your professionals for exceptions.

Family Records

Birth, Marriage, Divorce, Military discharge, and Death Certificates — keep permanently.

Medical records/ health insurance

Keep at least five years after the surgery or the end of treatment. If you’ve claimed medical expenses on your tax return, keep for seven years.

Estate Plan Documents

Check with your estate planning attorney and follow their guidelines.

Mortgages

You may wish to keep mortgage (including HELOC) documents for the ownership period of the property plus ten years. As a rule, keep statements for the ownership period of the property plus seven years.

Insurance — life, disability, health, auto, home

Retain the actual policies in your file. Keep policy information on hand for the life of the policy plus three years. Do not shred documents related to permanent insurance with cash value.

Utility bills

Most companies now have this info available online. Check last month’s statement against this month’s and shred last month’s bill.

Vehicle records

Maintain purchase info and maintenance records for as long as you own the vehicle. Store title records in a safe or safe deposit box.

Warranties

Keep until they expire.

Banking

Once reconciled, shred deposit slips. Access to three years’ worth of statements is a good best practice. In some circumstances (lawsuit, divorce, past debts) it may be wise to keep them longer.

Credit cards

If receipts and statements are for tax-related purchases, consider keeping seven years.

Employee benefits

Keep year-end statements on file. Defined pension-plan-related documents from current and former employers should be retained indefinitely.

Investments Forms

Organize by registration type: IRA, 401(k), Non-qualified, etc. Retain original paperwork and statements that help determine capital gains, losses, interest or dividends. Purge monthly or quarterly statements and keep annual statements that summarize this information. With IRAs or 401(k)s, it is a good idea to retain Form 8606 (reports non-deductible contributions to traditional IRAs), Form 5498 (“Fair Market Value Information” your IRA custodian sends each May), and Form 1099-R (report IRA income distributions).

Social Security benefits

To access your personal account, go to www.sa.gov/mystatement. Review your earnings record from the day you started working. If you see an error, you will want to have your W-2 or tax return for the particular year to help Social Security correct it.

Tax returns

Since the standard IRS audit looks at your past three years of federal tax records, 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 related 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.

Payroll statements

Shred paystubs after you reconcile them with your W-2. If you own a business or are self-employed, retain your payroll statements for seven years or longer.

If paper threatens to take over your sanity, you’re not alone. With these guidelines, set aside time this fall to get your financial household in order. You’ll be glad you did!

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