Document Retention

Is your garage overflowing with bank statements and paid bills from ten years ago?  Are you unsure about what documents need to be retained and what can be tossed? Speaking of tossing, what documents can be tossed in the trash, and which should be shredded?  Are you wanting to finally get control of your documents? If so, here are some suggestions for getting that paper under control today.

• Implement an electronic filing system, where you can easily store all vital documents without the need to hold on to them indefinitely.  
• Sign up for e-billing which eliminates the need to scan and then shred documents. You’ll always have access to prior months documents and can download and save the current billing statement on your computer if desired.
• Switch to online bill payment.  While many people are hesitant to pay their bills online, online security has increased tremendously in recent years. Not only does online bill payment eliminate the need to write a check and mail a payment, it eliminates the need to store months and months of statements.  
• Sign up for electronic statements from your bank.  Today, banks keep up to 18 months of bank statements that can be easily accessed from your online banking account. If a statement is needed, just go online and download a PDF statement to print, or save on your computer for future reference. Enrolling in electronic statements also eliminates the need to shred canceled checks and old statements.  

Keep in mind that there are some documents that will need to be saved forever, such as birth certificates and academic transcripts, that will be used frequently throughout your life. Be sure to keep original documents secured and provide a copy to entities that may require it.

Here are some other documents you’ll want to keep forever:

• Baptism certificate
• Adoption records
• Marriage certificates
• Divorce certificates
• Military records and discharge papers
• Medical records
• Passports
• Retirement account information
• Social Security cards

Save these documents for an extended period of time:

• Bank statements. You can save bank statements for up to one year, then shred. If you move to e-statements, you can eliminate this issue altogether.
• Tax returns and related documents should be saved for at least seven years, even though the IRS only has three years in which they can initiate an audit of past returns. Once the seven years has passed, be sure to shred any returns, correspondence, W-2s, 1099s, and other related documents.
• Credit card statements should be saved for one month. Once the bill has been paid and posted, the statement can be safely shredded. Move to e-billing to eliminate the need to shred.
• Utility bills can be shredded once payment has been made. Most utility companies offer e-billing options.
• Pay Stubs should be saved for the current year. Once the W-2 has been received, pay stubs can be shredded.  Many employers have moved to electronic access to W-2s and pay stubs, so you can access the information when needed, and don’t have to be concerned about shredding.
• Sales receipts and warranties should be saved until the warranty expires, then they can be safely discarded. If the receipt has any personal information on it, be sure to shred it.

By combining timely shredding, recycling, and online banking and bill payment, you’ll have that pile of documents down to a manageable level in no time.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.