Record-Keeping Question


B

BRH

I'm admittedly a pack-rat.

Although I track all of my investments (mutual funds) using Quicken
software, I still have almost every monthly/quarterly/annual statement
that I've ever gotten for each of my 15 funds. Needless to say, my file
cabinet is at the point of bursting. (I've had some of these funds for
over 15 years.)

I'm moving to a new home in the next month or so, so now seems like a
good time to clear out the file cabinet clutter.

How far back should I be keeping these paper statements? I'd like to
dispose of a lot of the old ones, but I don't know where to set the
"cut-off" date.

Thanks.

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M

Mark Bole

BRH said:
Although I track all of my investments (mutual funds) using Quicken
software, I still have almost every monthly/quarterly/annual statement
that I've ever gotten for each of my 15 funds. Needless to say, my file
cabinet is at the point of bursting. (I've had some of these funds for
over 15 years.)
First, let's assume these are ordinary accounts, not IRA's, in which
case your recordkeeping is essentially non-existent (unless you've made
non-deductible contributions to a traditional IRA or are planning to
withdraw your contributions from a Roth IRA before retirement).

Second, for years in which you made no purchases or sales, the annual
statement alone is quite adequate, dump the monthlies and quarterlies,
and just keep your buy/sell transaction record if you got a separate one.

Your main requirement is probably for taxes. For investment tracking
and reporting (financial planning), it sounds like your Quicken records
are more than adequate (assuming you can access all prior years, and
have off-site backups!).

Even for taxes, your Quicken might be adequate. You need to know when
and how much every purchase was, so that when the stock is eventually
sold, you can correctly calculate capital gain or loss. If you have a
dividend reinvestment (DRIP), this means you were probably making
purchases every quarter. If all of this is in Quicken, you don't need
the paper.

Several other "short cuts" might come into play when the stock is
disposed, reducing or eliminating the need for your own records: for
mutual funds (only), your brokerage can give you a basis amount to use
for tax purposes using a formula allowed by the IRS. Or, if you've
always had the same brokerage and they are good, they can actually give
you the specific purchases that match each sale. Or, some commercial
services can be used to match historical data to your current holdings
(essentially, to reconstruct purchases based on known prices and
dividend payouts). Or, finally, if you don't plan to sell the funds,
your heirs don't need to worry about what you paid, only what it was
worth when you died.

HTH!

-Mark Bole

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F

FranksPlace2

I had the same problem. Plus these are sensitive records that I don't
want spread around. So I waited until a cold day and burned
everything more than 2 years old in the fire place.

Records you need for taxes - those forms, not the monthly statements -
should be kept for 7 years.

Frank


I'm admittedly a pack-rat.

...
How far back should I be keeping these paper statements?  I'd like to
dispose of a lot of the old ones, but I don't know where to set the
"cut-off" date.

Thanks.

--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond.  For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
 
J

joetaxpayer

Mark said:
Your main requirement is probably for taxes. For investment tracking
and reporting (financial planning), it sounds like your Quicken records
are more than adequate (assuming you can access all prior years, and
have off-site backups!).
I continue to receive notices of shareholder lawsuits on stock purchased
during a certain period. The one in my hand now is for those who bought
Xerox from 2-17-1998 thru 6-27-2002. So this throws out the great rules
of thumb regarding the 7 yrs or even 10.
(Re-reading the OP, he mentions mutual funds only. Don't know if the
shareholder actions apply or are as frequent)
The last one I submitted for got me a whopping $32 after looking for the
documentation for over an hour. YMMV.

Joe

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D

Dave Dodson

Records you need for taxes - those forms, not the monthly statements -
should be kept for 7 years.
Records that prove your basis should be kept until seven years after
you've sold the stock and reported the gains or losses on your tax
return.

Dave

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J

joetaxpayer

Dave said:
Records that prove your basis should be kept until seven years after
you've sold the stock and reported the gains or losses on your tax
return.
Dave - for tax purposes, you are correct, but per my delightful
annecdote earlier, there may be other reasons to keep the info much longer.
Joe

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to keep the conversations on-topic for financial planning. Other posting
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W

Will Trice

FranksPlace2 said:
Records you need for taxes - those forms, not the monthly statements -
should be kept for 7 years.
Longer if you've held for more than 7 years (OP mentioned holding some
funds for 15 years).

-Will

william dot trice at ngc dot com

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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
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M

Mark Bole

Dave said:
Records that prove your basis should be kept until seven years after
you've sold the stock and reported the gains or losses on your tax
return.
I'm a little puzzled where this magic number 7 is coming from...
certainly not from the IRS. IRS Publication 552 "Recordkeeping for
Individuals" is a good place to start, at least for tax purposes.

This pub only mentions 7 years in connection with a claim for worthless
securities. Once you sell and report a stock sale, unless there is
fraud or you have understated gross income by more then 25%, there is
only a three-year statute of limitations.

Maybe you're thinking, if the gross proceeds from the stock sale would
have been more than 25% of the gross income for the year if the basis
had been zero, then you may need to wait six years in case the IRS
actually does claim your basis was zero...but that would be pretty
unusual, I think.

-Mark Bole

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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
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M

Mark Bole

BRH said:
I'm admittedly a pack-rat.

Although I track all of my investments (mutual funds) using Quicken
software, I still have almost every monthly/quarterly/annual statement
that I've ever gotten for each of my 15 funds. Needless to say, my file
cabinet is at the point of bursting. (I've had some of these funds for
over 15 years.)
This question got me thinking about paperless statements. There will
probably come a time sooner rather than later that you will have to
start paying extra to receive paper statements from your brokerage.

On the plus side, the cost of storing paperless statements is
negligible. Even better, why not just let the brokerage store the
documents for you, as many now do?

The biggest problem I have is, the moment you close an account, even if
you still have other accounts with the same institution, you
*immediately* lose on-line access to any historical statements for that
account. If you didn't previously download them, you're mostly out of luck.

-Mark Bole

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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
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D

Default User

Mark said:
This question got me thinking about paperless statements. There will
probably come a time sooner rather than later that you will have to
start paying extra to receive paper statements from your brokerage.
Right now, Vanguard charges fees for funds that are under a certain
dollar amount. However, that's waived if you sign up for electronic
statements.

Many now are having some sort of contest, a chance win money or a car
if you go paperless. They ought to just offer $20 cash.




Brian

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to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
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T

Tad Borek

BRH said:
Although I track all of my investments (mutual funds) using Quicken
software, I still have almost every monthly/quarterly/annual statement
that I've ever gotten for each of my 15 funds. Needless to say, my file
cabinet is at the point of bursting. (I've had some of these funds for
over 15 years.)

How far back should I be keeping these paper statements?

This is one case where being a pack rat may be the easiest approach.

The IRS requires documentation that proves cost basis. Given that you
can type anything you want into Quicken, I question whether the IRS
would accept such an entry as proof of cost basis, unless it has some
"authentication" kinds of functions I'm not aware of (e.g. with
downloaded data from custodians).

This can lead to some very long periods for retaining documents. If you
use "average cost basis" when reporting your taxable trades, then you
need to keep documentation showing the basis of every share you've ever
purchased, as long as you hold the fund (save the tax return too -- how
else will you remember whether you used "average cost" on a fund sale 8
years ago?) Once you liquidate a fund entirely, and file the tax return,
you'd need to wait at least three years before tossing the supporting
materials - that's the standard audit period. Special cases require
longer retention, such as failure to report a substantial amount of
income. So it's easy to come up with some very long retention periods.

If you have a year-end summary showing all purchases and sales, that
would be enough to track down (and prove) basis for all shares held.
Otherwise you'd need to sift through the statements and find the ones
that show a purchase or sale that you might want to document later.
Given the time requirement it may be easiest to just save everything?

-Tad

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to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
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