transactions in a rollover IRA

Generally, no. Transactions *within* the account have no tax impact. The important ones are anything where money crosses the barrier into or out of the account itself.

I do have all of the statements for when each of the rollovers was done. Why are these important?

Thanks, Anoop

Absolutely. I pulled out transaction data on MOT from nearly 10 years ago as part of a class action suit. Between the wife and me just got 2 checks totaling $600. It could have been like the Xerox, $32.49, hardly worth the trip to the basement, or it could have been much larger.

Going slightly off topic - there is no reason to *completely* discard

*any* financial documents. Since computer scanners and very large disk drives have become so cheap, it is quite practical to scan everything and store it to disk before discarding the hardcopy original.

Assuming that the rollovers were all pre-tax money, you probably won't need any of that documentation, either. If you've got post-tax money going into the IRA (and thus, have basis in it), you'll want careful records of that so you don't pay taxes on that money a second time.

I'd keep the record of the rollover itself, but wouldn't worry much about individual transactions within the account. You probably get a year-end statement with an aggregates list of all the transactions for the year. It's just a few pages, throw it in the folder and you can toss all the monthly stuff you have.

The correct way to keep track of post-tax contributions to an ordinary IRA is via IRS Form 8606 that you file with your federal income tax return in any year that you make a non-deductible contribution, take a distribution from your ordinary IRA, or do a conversion from your ordinary IRA to a Roth IRA. You want to keep the last Form 8606 you file until you file your income tax return for the last year that you have an IRA balance.

Dave

Here's a really obscure one that nobody mentioned yet: if you had to prove that you didn't have any wash sales between your IRA and your taxable account, you'd need documentation of your IRA trades.

It's hard to even come up with a hypothetical for that though...maybe an audit of a tax return where you'd claimed a large capital loss. But it raises the question of whether the IRS could go on a fishing expedition ("prove this wasn't a wash sale"). Off the top of my head I don't know the answer to that.

-Tad

It's all pretax.

This sounds like a reasonable idea. I guess I should just keep a text file/spreadsheet of all the transactions so that I can have easy access to them and don't have to wade through 30 years of statements to find a particular transaction.

Anoop

Unless one is really good at indexing these files, it could be real pain trying to find a particular statement/transaction from scanned documents. If you can't find what you need, then having the data on the disk defeats the purpose of having it.

Anoop

All you have to do is set up properly labeled subfolders to hold the named images, something like:

Scanned Documents Broker Statements Dewey, Cheatem & How 2008 January.JPG February.JPG etc. 2009 January.JPG February.JPG etc. Vanguard 2008 etc.

But will you have software that can read jpegs 30 years from now. I can't do much with the Xerox files I have on 8.5" floppy right now...

-Will

william dot trice at ngc dot com

Not just that, but these files are not searchable. So if you're looking for all transactions of a certain stock, you'd have to open each file and look. I think it's easier to browse through paper statements. But if you had the statements in digital form and some sort of index that could tell you exactly which statements you needed to look at for certain transactions, then one could be all paperless.

Anoop

Excellent point. Also online backup is mandatory for this kind of thing

- let "the cloud" deal with hardware upgrades, redundant fire/flood/etc proof backup, and the inevitable changes in storage media that will let an entire server farm live on the head of a pin.

My money is on PDF readers lasting through my grandchildren, if only because of the extensive use of it in government. It took years for them to start using it, it'll take 20 more for them to stop when/if it becomes obsolete, and people will still need to read legacy docs. And it's just hitting its stride really; one of the filings I do on SEC paperwork was only recently issued as a fill-in PDF (the form has been much the same for the entire existence of Adobe Corp).

I'd suggest folders like "2008", "2009" - it's unlikely most of this stuff will ever be used so why bother organizing it? Cross that bridge when you come to it - pour a tall one and sit down flicking through the hundred-odd PDFs you gathered for a given tax year.

-Tad

Two comments

1) After scanning, run them on an OCR (Optical Character Recognition) program. It may not be perfect, but enough of the text will be editable and searchable that finding what you want will be simple.

2) 8" floppie drives are still available and usable, just old. Hell, by your definition I should be unusable. BTW, didn't you backup your floppies on a hard drive? You can put your whole financial life on a

16G flash drive that you can carry on your keychain.

Chip

That's doable, with some work. Most scanners come with OCR (Optical Character Recognition) software which can convert scanned documents into text files. Those files would be kept with the scanned images, and would be searchable by the operating system, or they could be loaded into a database for more sophisticated searching and analysis. For example, in MS Access, you could have a table containing both a "memo" field holding the scanned/converted text, and an OLE (Object Linking and Embedding) field linking (pointing) to the original stored graphic image. OLE can also link to spreadsheets, video files, etc.

This is such an obviously useful item that I expect that it is probably already available as either a commercial product or shareware/ freeware.

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