Statements from your retirement fund and related savings account need to be kept for varying periods of time, depending on the type of account generating the document. For example, the tax regulations associated with individual retirement accounts, or IRAs, make all retirement-related forms and statements important while only select forms from other accounts are needed for your permanent files.
Some of your retirement statements only need to be kept as placeholders until an annual statement of your account and benefits is sent out at the end of the year. Hold onto the monthly or quarterly statements sent out by employee and employer contribution plans, such as a 401(k), until the end of the year. Retaining these statements allows you to compare the tally of monthly or quarterly totals with the sums reported on the annual statements for the same accounts. (References 1 and 2)
Some retirement statements need to be kept permanently or until the retirement account associated with the paperwork is closed. After the accuracy of your annual statement is verified against your monthly statements, the monthly or quarterly retirement and 401(k) statements can be discarded while the annual statements need to be filed. Keep all paperwork related to nondeductible contributions to your individual retirement account, or IRA, until you withdraw all of the money from the account in order to prove no income tax payments are needed on the funds. (Reference 1)
Since many of the financial statements and associated paperwork stored in file folders dedicated to specific years can be disposed of after the files are no longer needed for tax records, keep your retirement statements in a separate location to ensure they are not inadvertently discarded. Label a file folder for each retirement account and add each statement to the folder as it arrives. When possible, consider placing the folder in a safety deposit box or fireproof box instead of a traditional filing cabinet.
Retirement Related Tax Forms to Save
According to Bankrate, the IRS has a three-year timeframe to audit tax returns for accidental errors, such as improper deductions or math errors. The agency may also audit returns up to six years later if there is evidence that income was underreported by more than 25 percent. While some of your retirement-related tax forms could be tossed for tax purposes, it's important to hold onto several forms, including Form 8606, Nondeductible IRAs; Form 5498, IRA Contribution Information; and Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance, Contracts, etc. The totals reported on income tax forms provide a method of cross-checking your retirement account contributions and payouts against company or financial institution provided paperwork and verifying distributions and contributions if an error ever occurs.
Ashley Mott has 12 years of small business management experience and a BSBA in accounting from Columbia. She is a full-time government and public safety reporter for Gannett.