What About Withdrawing Large Sums of Cash From Your Bank

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

HYPOTHETICAL: Mary has $200,000 in a stock brokerage account but feels that the market will crash by mid-1999 and she wants to take physical possession of her money thru Y2K as she also fears the Feds may close the banks or otherwise prevent her from accessing her own money. Mary intends to sell all her stock in January 1999 and have a check for same deposited into her local savings bank.

QUESTION: What is the best way for Mary to take physical possession of her money. Does she make 10 withdrawals of $20,000 each, one withdrawal of the whole amount, or go thru the ATM machine a dozen times a week for 6 months? Clearly a withdrawal over $10,000 requires filing the IRS Form #? which may or may not get you audited. What is the best way for Mary to accomplish her goal?

-- John K. (koivulaw@mci2000.com), July 28, 1998


We've had a similar discussion recently, but one question that came to my mind never got answered: withdrawing $10,000 requires filing some form, but over what span of time? A year? Six months? She might be better off just withdrawing the whole lump & filing one form once.

If I were in Mary's position, I would first pay off any debts I have. With uncertain times ahead -- probably before 2000 -- it's just the smart thing to do. Assume she has a home loan, or decides to move out of town, and it takes about $100K to be completely debt-free.

While I'm not one of the "buy gold" advocates, this might be the best way to handle the remaining funds. If I'm right, gold is considered an investment -- in the same way as stocks or bonds are -- and she could just write a check and have done with it. BUT, I would look for other investment vehicles as well. The idea is that any major problems would tank most investments but make others much more valuable.

One last caveat, having $200K to invest isn't a "problem" I have. :-)

-- Larry Kollar (lekollar@nyx.net), July 28, 1998.

An interesting dilema. There is no question that the completion of a CTR form is required for any transaction over $10K. The alphabet gang concern themselves with 2 main issues - a)has the money been earned legitimately and have taxes been paid on it, and b). is there evidence of crimal activity to invesitgate.

A case may be made that after paying off anything Mary decided to, and making whatever gold, silver, etc., investments paid out of the checking account (does end any annonymity - food for thought) the amount left may best be withdrawn once with one CTR. First, one CTR form may not even get flagged, or take years to get noticed, while several forms would be flagged from the same account or account holder for an investigation as suspicious activity. Also, bank tellers are REQUIRED to inform the boys of any suspicious activity or transaction of any kind whatsoever, or face heavy fines and imprisonment. A cash transaction of a little as $3000 can get a suspicious activity report filed on you by the teller, who is protecting themself from possible indictment if he/she fails. You will never know until your account is siezed.

One could then argue that if she has a legitimate reason for wanting cash, just do it once and be prepared to back up any inquiry with factual info ont he source of funds.

Remember that any creative way to circumvent CTR requirements is called "structuring" and is subject to a huge fine and up to 10 years in prison. The accounts involved will likely be siezed without any notice or due process of law. Bye-bye funds. Playing by the rules will avoid this scenerio. You may be audited, but your account will not be siezed for suspected (and I might add, unproven) illegal activity.

All dollar tranactions are monitored by FinCen the huge supercomputer in fedland. It uses fuzzy logic to determine if series of transactions consistutes suspicious activity. You support of your representatives in the east makes all this possible.

Remember that the real use of all "drug war laws" are really to assist the aplhabet gang in investigating citizens and verifying taxes paid - tracking the trail of all $ as much as possible.

So if it was me, I'd take my chances by making one withdrawal of the entire amount, as near to 2k as possible while still being safe. I'd also make damn sure that I had all my documentation as to where the money came from and that the taxes were paid on it.

My personal opinion and it certainly should never be construed as advise of any kind.

Hope this helps.

-- anon (anon@anon.com), July 28, 1998.

I have been considering cash withdrawals and I've done a little research to see what the regulations on reporting are. Do not consider this any kind of definitive advice -- I'm just John Q. Public -- but, from searching the IRS site, I learned that it is Form 4789 that a financial institution must file if someone engages in a cash transaction. This is in contrast to form 8300, which must be used by a business to report when someone uses more than $10,000 in cash to purchase something.

I had heard that the bank had to report it if you deposited or withdrew more than more than $10,000 in cash in a year. However, reading the instructions that come with form 4789 (http://www.irs.ustreas.gov/prod/forms_pubs/fill_forms/f4789.pdf) I find the following statement:

" Who must file. --Each financial instituion must file Form 4789(CTR) for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, to, or through the financial instituion which involves a transaction in currency of more than $10,000. Multiple transactions must be treated as a single transaction if the financial instituion has knowledge that (1) they are by or on behalf of the same person, and (2) they result in either currency received or currency disbursed by the financial institution totalling more than $10,000 during any one business day."

So, if I am reading this correctly, it is only a trigger if you do more than $10,000 of cash transactions (or a "suspicious transaction" of any amount) in a single business day. It would appear from this that you could take out $5,000 every week and legitimately the bank would have no need to report it, even though the total over the course of a year would be way over $10,000.

The $10,000 per year figure DOES matter when deciding whether a business should file form 8300 however-- if you make more than $10,000 in cash payments in a year for something you buy, the business is supposed to report it.

It might seem suspicious to take $5,000 out in cash every week however. This may seem naive, but I would tend to lean toward taking an absolutely honest approach. If I were asked why I was taking out so much cash, I would respond, "Because I am uneasy about the stability of the financial system and I feel more secure with the cash in hand." It's true, and there is no law (yet) against having no concerns about the stability of the financial system.

-- Mark (another@anonymous.guy), July 29, 1998.

Now that was a thoughtful, well considered reply. Thank you.

-- John K. (koivulaw@mci.2000.com), July 30, 1998.

Moderation questions? read the FAQ