How long should you keep IRA statements?

If you have a large trail of financial documents, you may want to know what you can keep and what you can trash. Find out how long you should keep IRA statements and other financial documents.

3 min read

As you make financial decisions, there is a growing number of documents that you have to handle. From prospectus to retirement statements, you can easily be overwhelmed by the number of documents that enter your home. You will need to hold some of these documents for just a few months, a few years, or over your lifetime. IRA statements are not an exemption.

You should keep quarterly IRA statements until you receive the annual IRA statement. Compare the two documents to see if they match. If they match, shred the quarterly statements and retain the annual IRA statement for as long as your account is active, or up to when you retire. If you made nondeductible contributions to an IRA, you should keep the IRA contribution records permanently to prove that you had paid taxes when you start taking distributions from the IRA.

How long to keep financial records

As the paper trail grows bigger, it becomes a challenge to keep financial documents organized. Here is how long you should keep various financial documents:

IRA statements

When you receive quarterly IRA statements, you should retain them until when you receive the annual statement. Once you confirm that the quarterly statements and annual statement match, you can dispose of the quarterly statement and keep the annual statements.

You should keep the annual statement for as long as possible until when the IRA account is closed or you retire. Additionally, you should also keep the following tax forms related to IRAs:

Form 8606: This tax form reports nondeductible contributions made to traditional IRAs. You should keep this tax form to prove that you had paid tax once you reach the retirement age.

Form 5498: This form is known as the IRA contribution information form, and it details the contributions to your IRA and the fair market value of the IRA at the end of the year.

Form 1099-R: This tax form shows the withdrawals taken from your IRA.

Pay stubs

You can keep paycheck stubs for up to one year. You should match the pay stub entries with your annual W-2 form. If the entries are correct, you should shred the pay studs, but retain the W-2 forms. However, if there is a mismatch between the two records, you should notify your employer to update the records.

Brokerage statements

You will need to keep the purchase and sales slips from your brokerage until you sell the securities. These slips can help you prove that you have tax gains or losses when filing annual tax returns.

Credit card statements

You should keep original credit card receipts for up to 45 days until when you get a monthly statement from the credit card issuer. If the two records match, you can shred the original receipts. You should keep the credit card statements for up to seven years if there are tax-related expenses that need to be documented.

Tax returns and records for tax deductions taken

Once you file the annual tax return, you should keep the records for up to seven years. The IRS has up to three years from the date you file your tax return to audit your tax returns. However, if you filed a fraudulent return or failed to file the annual return, there is no time limit for the IRS to audit your returns.

How to store financial documents

If you need to store certain financial documents such as IRA statements for future use, you will need a reliable storage solution. Good storage should be easily accessible, well organized, and protected from theft and weather damage.

Here are options for storing financial documents:

Paper storage

A popular way of storing paper documents is using a filing cabinet. You can organize files based on the year, type of financial document, or subject. However, for sensitive documents, you should use a home safe to protect your documents. If you prefer to keep the documents away from home, you can opt to rent a safe deposit box at your bank.

Electronic storage

You can cut down the paper trail by opting to receive electronic statements, either via email or downloading the statements directly from your online account. If you have a batch of documents that you want to store electronically, you can scan them into your computer or take photos using your cell phone.

You can store the digital records on an external SSD or HDD. Digital storage may be susceptible to viruses and failure, and it is recommended to have multiple backup options to avoid losing all the data.

Cloud-based storage

Another electronic storage option is using cloud-based storage. There are dozens of free and paid cloud-based storage options that you can use such as Dropbox, NextCloud, iDrive, iCloud, OneDrive, and Google Drive. Cloud-based storage saves on space, and it protects your documents through encrypted networks.