How long do you have to keep monthly financial statements?
A good rule of thumb is to keep your monthly statements for the current year, and then shred them once you've reconciled them with an annual statement. The exception is any statement needed for tax purposes – those get grouped into the “keep for seven years” category.
Your best bet is to hang on to your tax returns as long as possible. If you ever face a tax audit, then you'll have all the information you need. You also should consider saving documents that verify the information on your returns for at least seven years, like W-2 and 1099 forms, receipts and payments.
Most financial experts say you should keep your bank statements in either digital or hard copy for at least one year. Once they've been in the filing cabinet (or your computer hard drive) for one year, you can finally shred the paper or press the delete button.
While brokerages have cost-basis reporting obligations, it's still important that you keep good records of your transactions. Hold on to trade confirmations showing how much you paid for specific shares, or keep track of that information on your own records at home.
Why You Should Keep the Statements. Access to a record of your recent purchases, bill payments, and payroll deposits is necessary for a number of reasons, not least as a proof of payment in case of a dispute. You should review your bank account activity regularly for evidence of identity theft and debit card fraud.
KEEP 3 TO 7 YEARS
Knowing that, a good rule of thumb is to save any document that verifies information on your tax return—including Forms W-2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts—for three to seven years.
Document retention: Employers must retain employee exposure records for the duration of employment plus 30 years. If the employer maintains certain employee medical records, the employer must retain them for the duration of employment plus 30 years.
If you charged business expenses or any other tax deduction to your credit card, keep that billing statement and any other associated receipts for seven years. The IRS can audit your tax return for up to six years. By keeping tax-related documents for seven years, you protect yourself if you're ever audited.
The IRS retains the right to audit anyone's financial history for up to six years. In this case, it's wise to keep credit card statements for at least three years, preferably six if there is a high risk of audit.
In general, 401(k) plan records must be kept for a period of not less than six years after the filing date of the IRS Form 5500 created from those records. However, records necessary to a participant's claim for plan benefits must be kept longer.
What documents to keep and for how long?
To be on the safe side, McBride says to keep all tax records for at least seven years. Keep forever. Records such as birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should be kept indefinitely.
"There are things that we should keep for seven years like tax returns, your deductions, records of things that you've sold mortgage documents, medical records. There's things you should just keep for one year - like bank statements, pay stubs, quarterly investment statements, canceled checks," Noceti said.
Once you confirm that the quarterly statements and annual statement match, you can dispose of the quarterly statement and keep the annual statements. You should keep the annual statement for as long as possible until when the IRA account is closed or you retire.
Bank statements and canceled checks. Even if they're old statements, they should be shredded. Your name, address, phone number, and bank account information are in those statements, along with your habits, purchases, and banking history.
For example, you will want to keep your old bank statements accessible for one year. Timing is important in bank statement disposal because these documents may need to be referenced for financial purposes. Store your statements in waterproof bags or lock them in a safe while they're in your possession.
Checkbook Registers: Up to 10 Years
“Not only are they the story of a year, but if you use them regularly, it's a reference for expensive purchases or services that you didn't keep receipts for.” (Plus, these are records that do not exist digitally, meaning you need to keep them longer.)
The Centers for Medicare & Medicaid Services requires that providers retain patient records for at least 10 years.
Keep canceled checks for one year unless you need them for tax purposes. Refer to them when you reconcile your accounts each month so you know what has cleared. If your bank does not return your canceled checks, you can request a copy for up to five years.
Old records may be destroyed after 20-30 years per bank policy. However, banks are not required to purge very old records and may still have the ability to retrieve them. Accessing archived records involves manually retrieving them from storage. This takes time and banks will charge fees to cover costs.
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
Which type of record must be kept permanently?
Tax return, results of an audit by a tax authority, general ledgers, and financial statements should normally be kept indefinitely.
Legal documents: It's best to keep business formation records, deeds, patents and trademark registrations, property appraisals, bill of sale documents and other ownership records indefinitely.
In the case of credit card statements, it's usually wise to keep either paper copies or digital files for at least 60 days. But in some cases, you might want to hang on to them for up to six years.
Unless you need them for tax time or a dispute with your issuer, you can typically shred paper statements after 60 days.
Most credit cards are set to expire after three to five years, depending on the issuer, to protect against general wear-and-tear and potential fraud.
