We have boxes and files filled with financial records, old tax returns, files on investments we no longer own, home purchase and sales records,etc. I would like to simplify and destroy unneeded files.
How long is it necessary to keep:
1. income tax returns and supporting documents
2. 401k and IRA records
3. non-tax deferred investment records
4. home purchase and sale records

How long is it necessary to keep:
1. income tax returns

I'd keep those permanently. A lifetime of tax returns shouldn't be more than one file drawer or filing box.

and supporting documents

4 to 7 years, depending on how conservative you want to be with record retention.

2. 401k and IRA records

4 years should be adequate. Except for records showing any after-tax contributions, which should be held until 4 years after the the accounts are emptied. That might make the records permanent if you never drain your IRA/401k accounts.

3. non-tax deferred investment records

4 years after the investment is sold. If you give an investment to someone, give them the related purchase record.

4. home purchase and sale records

4 years after the home is sold.

Others will undoubtedly have differing opinions, which might make sense for your situation.

--Peter

2. 401k and IRA records

4 years should be adequate. Except for records showing any after-tax contributions, which should be held until 4 years after the the accounts are emptied. That might make the records permanent if you never drain your IRA/401k accounts.

3. non-tax deferred investment records

4 years after the investment is sold. If you give an investment to someone, give them the related purchase record.

I'd refine this a bit.

100% agreement on after-tax contributions.

vanilla taxable investment accounts. I'd keep the purchase confirmation until eveything bought had been divested. If selling the purchase confirmation goes with the sale confirmation, and its status changes to this year's taxes, to follow that retention schedule.

Investment accounts, whether retirement or taxable, yield incredible amounts of paper in the form of statements. They serve only one useful purpose IMO. You should check to make sure nothing hinky is going on. Having done that review, I'd pitch it. If you do this online you never have paper. If you're getting paper statments, you keep the current one only until you get the next one.

Phil
Rule Your Retirement Home Fool

Investment accounts, whether retirement or taxable, yield incredible amounts of paper in the form of statements. They serve only one useful purpose IMO. You should check to make sure nothing hinky is going on. Having done that review, I'd pitch it. If you do this online you never have paper. If you're getting paper statments, you keep the current one only until you get the next one.

I'm going to disagree with Phil on this one. Although things are getting better with increased types of 1099-reporting, there are still tax related transactions which can appear on monthly statements and nowhere else: investment interest, investment expenses and certain corporate reorganization transactions. Many brokers are now providing annual summary statements that document these, but not all do. To the extent that any of these transactions are relevant to a taxpayer's situation, I would keep those statements on the standard retention schedule.

Ira

I'm going to disagree with Phil on this one.

I agree with your disagreement.

Phil
Rule Your Retirement Home Fool