Springtime is usually a busy season and one of my favorite times of the year. The cold, short days of winter finally give way to more sunshine, longer days and a lovely “spring green” the beckons the call of lawn mowers. For some, this time of year means spring cleaning as well. Going through closets, cleaning out the garage and organizing files may be on your list.

Accordingly, this is a great time to review best practices for retaining important financial documents. Knowing how long to keep different types of records can help you stay organized and avoid unnecessary clutter while ensuring you have the necessary documents when needed. Below are some general guidelines we hope you find helpful:

1. Tax Documents (Keep for 3–7 Years):
Tax records are among the most important documents to retain. The IRS generally recommends keeping tax returns and supporting documents—such as W-2s, 1099s, receipts, and bank statements—for at least three years from the date the return was filed. However, if you fail to file a return or file a fraudulent one, these timelines are extended. To be safe, most tax professionals recommend keeping tax records for seven years.

2. Pay Stubs and Employment Records (1 Year or Until Reconciled):
Keep pay stubs for at least one year or until you reconcile them with your W-2 form and annual tax return. Employment records, including contracts and benefits information, should be kept for as long as you are employed and for a few years afterward in case of disputes or questions about retirement contributions.

3. Bank and Credit Card Statements (1–7 Years):
Bank and credit card statements should generally be kept for one year, especially if you don’t need them for tax purposes. However, if any transactions relate to tax deductions, home improvements, or major purchases, it’s wise to keep those specific statements for seven years.

4. Loan and Mortgage Documents (Until Paid Off + 7 Years):
Keep loan documents, including promissory notes and payment records, until the loan is fully repaid. After payoff, retain final statements or proof of payoff for an additional seven years in case of future disputes or questions.

5. Investment Records (7 Years After Sale):
Keep investment account statements and trade confirmations until you sell the asset. After the sale, keep related documents for seven years for tax reporting and in case of an audit. Of note, many financial institutions can provide statements going back if needed. Additionally, some financial institutions may automatically store statements via a secure online web portal. This can certainly assist with your document retention efforts.

6. Property Records and Home Improvement Receipts (As Long as You Own + 7 Years):
Documents related to the purchase, sale, and improvement of property should be kept for as long as you own the property, plus seven years after its sold. This includes closing documents, titles, appraisals, and improvement receipts that can affect your capital gains tax.

7. Insurance Policies (Until Updated or Canceled):
Keep insurance documents, including policy declarations and proof of coverage, for as long as the policy is active. Once you replace or cancel a policy, retain the old documents for one year.

8. Estate Planning and Legal Documents (Indefinitely):
Keep wills, trusts, powers of attorney, and other legal documents indefinitely. These are crucial for your estate and should be stored securely and accessible to your beneficiaries or legal representatives.

By following these retention guidelines, you can better protect your financial interests, simplify tax time, and avoid unnecessary risks. In a digital age, we encourage clients to consider using digital tools and/or to scan and organize documents for easy access and backup. If you have specific questions about records not covered here, please reach out to your Fiduciary Investment Advisor and discuss.