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Fidelity’s Investors Weekly has a nice roundup of how long to keep various types of documents. The piece mainly focuses on how long to keep the records for tax purposes, which may or may not be the most important function of these documents based upon circumstance.

Tax records: Keep three to seven years

I would push for closer to seven years because the IRS has a sneaky habit of using the “we have six years if you underreport your income by 25%” rule if you’ve pitched your records. And this means all tax records: W-2s, mortgage deduction statements, charitable contribution records, child care expense backup, etc.

Investment records: Keep until you sell the security, plus seven years

This is primarily for tax purposes. You need all of your historical records to calculate the cost of the investment, which can be changed by dividends and stock splits. If you don’t have the records the IRS will assume a zero cost and you will pay tax on the entire sales price.

Retirement account records: Keep indefinitely

I hadn’t heard that the IRS was requiring all retirement statements to be kept until all the amount is drawn out. For me, that could be 70 years (!) if I live into my 90s. I’m not sure of the reason for this, but I will definitely start keeping records.

Home improvement records: Keep until you sell your house, plus seven years

For the same reason as investment records. Major home improvements increase the “cost” of your house for tax purposes. They don’t cover closing records, but have those as well. Again, the IRS will assume zero cost if you don’t have these records.

Bank and cash management account: One year to indefinitely

I’m not sure why they say “indefinitely” since their description says seven years. Again, for tax purposes you should keep any checks that go on your tax return (deductions, etc.). Your bank statements can help with an audit if you no longer have W-2s, etc.

Personal bills: Until you have proof of payment

We don’t do a very good job of this. We usually shred as soon as they are paid. By the time you get notified you didn’t pay it’s too late anyway.

So, there you have it. A brief primer on document retention.