Time to plug in the shredder and tame the clutter

If your list of 2008 New Year’s resolutions includes a vow to tackle the mounds of financial paper you’ve been collecting, here’s some advice from Rosanne Grande, a financial planner with R.W. Rogé & Co., in Bohemia, N.Y., on what to keep and what to shred:

• Bank records. Keep deposit and withdrawal slips until you get your bank statement each month. Retain monthly statements for at least seven years, in case the IRS audits you. Ditch CD records after the accounts mature and you collect the interest you’re due. The same advice applies to loan documents after you’ve paid back all the money that you borrowed, with one exception. Don’t burn your mortgage after you’ve paid it off. Keep it as proof of how much you paid for your house so you can calculate the tax, if any, on your gain when you sell it.
• Investment account documents. Shred the statements you receive each month or quarter as new ones arrive, but keep annual statements for seven years. If you still hold stock in certificate form, ask your broker to hold them for you electronically. You can also convert U.S. Savings Bonds from paper to electronic using the U.S. Treasury’s SmartExchange program at TreasuryDirect.
• Retirement-plan records. Retain your annual 401(k), IRA, and Keogh statements. If you’ve made nondeductible IRA contributions, keep Form 8606, which you must file with your tax return. It proves that you’ve already paid taxes on money in those IRAs.
• Credit-card receipts and bills. After you pay your bills each month, staple receipts for credit-card purchases to your statements and keep them for one year. They’ll come in handy if you need to return defective goods that you bought with a credit card. After one year, shred the receipts. You can do the same with your credit-card bills unless you need them to support tax deductions. In that case, hold them for seven years.—Denise Topolnicki
  

Comments

[Lisa Garner]

Is it okay to scan and save these documents, rather than having to keep a paper hardcopy?