Simple Guide on How to Withdraw Large Amount of Money from Bank
You own all the money in your bank account, so it would seem you can do anything you want with it, including withdrawing large sums of money. However, large withdrawals are subject to certain rules. Below is a simple concise guide on how to withdraw large amount of money from bank.
Federal law allows you to withdraw cash from your bank accounts as much as you wish, After all, it’s your money.
Take out more than a certain amount, however, and the bank must report the withdrawal to the Internal Revenue Service, which might come around to inquire about why you need all that cash.
While they can’t stop you from accessing your own money, they may need time to gather enough cash on site. Large withdrawals require both identification and an explanation.
If you provide both of these things and have ample time, your transaction will go smoothly.
When You Need to Withdraw a Large Amount of Money
There may be some instances when a person might want — or need — to withdraw a huge amount of money in cash from the bank:
- You want to make a big-ticket purchase, like paying cash only for a car without using your credit card and exceeding your credit utilization, which can negatively impact your credit score.
- You have that your cash is safer at home.
- You’re repaying someone (e.g., you borrowed money earlier).
That doesn’t mean any of those reasons make it a good idea to carry that much cash on you. It’s dangerous and risky.
Cash is hard to track, easy to lose, and easily stolen.
The Rules on Withdrawing Large Amounts of Money
Federal Rules
A 1970 anti-money-laundering law known as the Bank Secrecy Act spells out the rules for large cash withdrawals. In general, banks must report any transaction exceeding $10,000 in cash.
That includes not only withdrawals but also deposits, currency exchanges (such as swapping dollars for euros or Japanese yen), and the purchase of traveler’s checks.
The law also requires banks to check identification on any transaction that would trigger a report.
In other words, even if your bank doesn’t usually ask for ID with withdrawals, it must do so for withdrawals over $10,000.
Aggregate Withdrawals
Under the law, all transactions carried out at an institution within a single day count as a single transaction, and all branches of a bank count as a single institution.
So if you went to your bank in the morning and withdrew $5,000, then went to a different branch in the afternoon and took out another $5,000, the combined transactions would trigger a report to the IRS.
In addition, if the bank has reason to believe a series of transactions are related, even if they’re not on the same day, the bank is obligated to file a report.
If you come into the bank every day for a week and withdraw $8,000, you could expect the bank to file a report.
Structured Transactions
Banks must also report transactions that are less than $10,000 when they believe that the dollar amount of those transactions was specifically chosen to avoid triggering the Bank Secrecy Act.
Federal regulations refer to these as “structured” transactions. Withdrawing $9,990 will probably raise a red flag as a potentially structured transaction. In fact, any transaction, regardless of the amount, that the bank deems suspicious can trigger a report.
Exceptions to the Rule
The law makes a few exceptions. A bank doesn’t have to file a report on large cash transactions involving other banks or government agencies. It also allows banks to apply for exemptions for regular business customers.
If a bank has a department store as a customer, and that store’s manager withdraws $20,000 in cash for the store safe or the registers, the bank doesn’t have to make a report each time it happens.
Instead, the bank can file a form with the IRS identifying the store as a regular business customer. This exemption must be renewed every year.
How to Withdraw Money Without Raising Red Flags
Here’s how you should approach it.
Firstly, depending on the dollar amount, understand that your bank might not have enough cash in its vault to give you.
The truth is:
Banks don’t often that much cash on hand contrary to the image they present. A $1 million withdrawal may be a bigger sum than your bank branch has on-site.
So, you may be required to wait for a week or two before retrieving your newly liquid currency. The money needs to be literally shipped in for special withdrawals, and your bank may require you to provide a few days’ notices.
And, you may need to explain the nature of your withdrawal to the teller or banking rep if it’s over that $10,000 threshold. While this might seem like an invasion of your privacy, this information is needed for their report to the IRS.
It can look out of the ordinary for someone to withdraw such a significant amount of money, abnormal for a customer who usually deals in small-to-medium-sized transactions.
Is it for Business, or Personal, Purposes?
The larger the intended cash withdrawal, the more alarming the transaction may seem since cash only sends the signal of “It’s being used for unscrupulous reasons that I don’t want to be traced back to me.”
Note: Banks know that financial scams are out there. Employees may ask for more details to figure out if a customer is about to become a victim of some type of fraud.
Fail to disclose what you plan on doing with the withdrawn funds (especially when it’s cash), and you could be denied the money, or reported to authorities for suspicious or potentially fraudulent activity.
You don’t have to worry. All this isn’t meant to discourage or scare you from transacting your own money in your own account.
Remember these tips:
- Cooperate with your bank when planning to make large withdrawals
- Fill out the necessary forms and be prepared with identification (like your driver’s license, passport or other ID), plus account number and details
- Disclose what your bank needs (like what the money will be used for)
- Avoid making smaller withdrawals that add up to $10,000 or more to reduce the risk of structuring
Once you’ve followed all the steps, the money is yours to withdraw.
Other Options that are Safe to Consider
Large withdrawals are not only inconvenient but unsafe. A stack of $10,000 in $100 bills is only a half-inch thick. If you withdrew $100,000, you’d have 10 of them on hand.
Withdraw $1 million, that’s 100 stacks. You’ll look relatively inconspicuous carrying around a suitcase, or even an envelope, full of large bills.
But, that won’t deter a thief from robbing you or breaking into your house knowing you keep cash there.
Plus, anyone with the financial savvy to amass significant funds in the bank should be aware that non-cash methods of investment, deposit, and withdrawal are the smartest — and safest — ways to transact money.
Consider some ways to move a large amount of money without transferring cash physically (ATM withdrawals don’t count; they have limits, too):
Use your Credit Card
If the cash withdrawal was meant to pay for a purchase, better to put it on your credit card and pay the balance off.
That said:
It may mean getting charged interest if you carry a balance from month to month, but it will keep your credit revolving and avoid the risk of carrying a bank’s worth of cash around.
Make sure to check your card’s credit limit first.
Get a Cashier’s Check
Instead of withdrawing, say, $100,000 in cash, have your bank draft a cashier’s check in your desired amount.
A perfect (and ultimately safer) substitute to carrying around dangerous amounts of cash, the best thing about cashier’s checks is that they work like regular personal checks, but their payment is guaranteed by the bank.
Keep in mind:
There are nominal fees for cashier’s checks (most banks charge about $5), but for large amounts, your bank may waive the fee.
If the check is lost or misplaced, you may also be responsible for purchasing an indemnity bond before you can have a new check issued.
Transfer Money Electronically
You can use a wide range of methods to transfer money without ever handling the cash yourself. They include wire transfers, electronic funds transfers, personal payments, and more.
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