Proper document retention and destruction policies are essential for companies to comply with laws and regulations while also optimizing operations. Shredding certain records is necessary, but must align with document retention requirements across different jurisdictions.

What Records Must Be Kept For 10 Years?

Certain financial and tax records should be retained for at least 10 years before being destroyed. 

Examples include annual tax returns, supporting documentation for income and deductions, records of payroll and expenses, monthly bank statements, investment trade confirmations, retirement plan reports, and copies of filed tax forms. 

 

Health records like medical imaging and testing results should also be kept for 10 years. In addition, contracts, insurance policies, product warranties, and other legal and financial documents should be held onto for 10 years beyond termination or expiration. 

Keeping these types of documents for a decade provides the evidence needed to support tax reporting, audits, lawsuits, insurance claims, or other contingencies that may arise. 

After 10 years, these records can potentially be disposed of securely if they are no longer actively needed.

Federal Laws And Regulations

Various U.S. federal laws set retention rules for certain documents:

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  Sarbanes-Oxley Act - 5 years for financial audit records

  
  


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  Internal Revenue Code - 3 years for tax documents

  
  


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  Fair Labor Standards Act - 2-3 years for payroll records

  
  


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  Gramm-Leach-Bliley Act - up to 7 years for financial institution customer records

  
  

State Laws And Industry Regulations

Individual U.S. states often have their own document retention statutes. Examples include health records, real estate contracts, corporate litigation documents, and education records.

Certain industries like healthcare and financial services have extensive retention rules from regulators and licensing bodies. Companies must be aware of rules relevant to their jurisdiction and business.

Data Privacy And Data Security Considerations

Personal data privacy laws like GDPR in the EU and CCPA in California also shape document retention. Businesses must strictly limit keeping customer data per privacy rules and delete records promptly.

Retaining documents also creates cybersecurity risks if files with sensitive customer or corporate data get breached. Following minimum legal retention durations improves security.

Balance Retention Timeframes With Risks

In some cases, businesses retain detailed records far beyond what regulations or prudent risk management require. This accumulates piles of extraneous paper and digital documents.

Setting clear retention policies based on binding rules and corporate risks is optimal. Records past required timeframes should be securely destroyed.

Document Destruction Methods

Records must be destroyed in a manner that safeguards any confidential information they contain. For paper, shredding is generally the preferred destruction method. Records should be cross-cut or micro-cut shredded, then recycled. Free paper shredding for seniors near me can help securely dispose of sensitive documents.

Deleting digital files permanently with proper protocols is crucial as well. Relying on simplistic delete functions creates data security vulnerabilities if files are recoverable. Records must be wiped completely from all storage locations, including cloud platforms and backups.

What Is Standard Document Retention Policy?

A standard document retention policy provides guidelines on categorizing documents and how long they should be kept to meet legal and operational needs. 

General schedules include retaining financial records for 7 years, contracts for 10 years post-termination, and personnel files for 3 years after employment ends. 

Tax documents are kept for 5-10 years depending on type. 

Vital records like articles of incorporation are permanent. Standard policies balance retention regulations, operational efficiency, and security risks of keeping documents too long.

What Are The Requirements For a Data Retention Policy?

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  Classify data by type and sensitivity - The policy should categorize all information handled by the organization and outline specific retention periods and destruction procedures based on data type and level of sensitivity. More sensitive data typically requires longer retention.

  
  


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  Specify retention periods - Clear retention schedules should be defined, indicating how long data should be kept in each category such as financial records, contracts, employee files, email, etc.

  
  


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  Identify data owners - The policy must identify specific personnel or roles responsible for making retention and destruction decisions for each data type.

  
  


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  Detail secure destruction methods - Approved destruction methods like shredding, degaussing, and system wiping must be specified. Free paper shredding events Fairfax County provides compliant and convenient document destruction for residents.

  
  


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  Outline backup and archiving procedures - Guidance for ongoing backups as well as long-term archives should be included.

  
  


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  Ensure legal/regulatory compliance - Retention periods must meet any industry, governmental, or other legal retention mandates.

  
  


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  Allow for litigation holds - The policy must include provisions to preserve relevant data for ongoing or imminent lawsuits or investigations.

  
  


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  Establish e-discovery procedures - The organization must be prepared to retrieve data for discovery requests in litigation or audits.

  
  


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  Support with security controls - Data retention must be reinforced with access restrictions, encryption, etc. to guard against illegal change, destruction, or access.

  
  


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  Conduct periodic audits - Regular audits should verify compliance across departments and systems.

  
  

What Are Some Indicators A Document Retention Policy Needs Updating?

Policies should be reviewed if the company enters new jurisdictions or industries with different rules, if new regulations are enacted, if a data breach occurs from keeping files too long, or if paper and digital storage accumulation become excessive.

How Can Companies Track Document Destruction And Retention Compliance?

Maintaining a central log of documents deleted and shredded, tagging files with scheduled destruction dates, and designating retention compliance staff are best practices for tracking compliance. Automated digitization and retention workflows also assist with monitoring.

What Should Be Done With Documents That Must Be Kept Indefinitely?

Indefinite retention records like articles of incorporation or perpetual real estate contracts can be digitized for storage optimization. Keeping only one physical original in secure storage with digital copies for access helps minimize retention burdens for permanent records.

Conclusion

Adhering to document retention laws is crucial for organizations to avoid fines and litigation risks. When the required retention period ends, shredding and other secure destruction methods ensure compliance by permanently rendering confidential data unreadable. 

Following sound data retention and disposal practices demonstrates an organization's commitment to compliance, security, and privacy.