Spend an afternoon getting all of your documents into files. Organization will help you, your financial advisor, your accountant and your heirs. Having important financial documents organized in one place will help you find what you need for appointments with your financial professionals, or even to complete your own tax return. It will also help your heirs in the case of your death. You don't want your loved ones to have to search high and low for important documents after you pass, especially while they are dealing with the emotions of your death. None of us like to think about dying, but it really helps to have these documents organized in one place if the unforeseen happens.
Here is what you'll want to put in your files:
Investment statements: Organize them by type: IRA statements, 401K statements, non-IRA statements (brokerage accounts), and annuity statements. The annual statements are the most important. You can typically shred monthly or quarterly statements. Keep confirmations of purchases of investments for non-IRA accounts. You will need these items for documentation of "cost basis" when doing your taxes. Also retain your IRA- and 401-K- related forms: Form 8606, Form 5498 and Form 1099R.
Bank Statements: Keep the last three years on file just in case you get audited.
Credit card statements: These are less necessary to keep, but you may want to keep any statements that contain tax-related purchases (e.g., purchases for a business-related item) for up to seven years.
Mortgage documents, mortgage statements and HELOC statements: As a rule, keep mortgage statements for the period of property ownership plus seven years.
Federal and state tax returns: An IRA audit looks at your past three years of federal tax records. So I suggest you keep three years of federal and state tax records on hand - up to seven is really safe.
Payroll statements: If you own a business or are self employed, keep your payroll statements for seven years or longer.
Employee benefits statements: Keep the annual report for these on file.
Insurance: Life, disability, health, auto and home...keep policies on file for the life of each policy plus three years.
Medical records: You should keep these documents on file for five years after a medical procedure or treatment period. If you claim medical expenses on your federal return, keep them for seven years.
Trust documents, Wills and Powers of Attorney (POA): These should be filed in a safe place where your beneficiaries know they are located. A copy of the POA for health care and for property should be given to the respective person(s) assigned as your POA. A copy of your POA for health care should be given to each doctor you see, for your medical chart.
Sharon Case is a registered, licensed investment advisor with Cetera Advisor Networks LLC. She can be reached at 630-852-4300 or by email a [email protected]. Registered representative offering securities through Cetera Advisor Network LLC, member FINRA/SIPC. Cetera is under separate ownership from any other named entity.