7 things to know if you withdraw more than $10,000 from your checking account

If you followed the advice to save as much money as an emergency fund or another form of savings, you should feel entitled to withdraw money when necessary. After all, that’s what it’s there for.

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However, withdrawing large sums of money is not as simple as making it. There are legal and other financial considerations to take into account, even when it comes to your own money.

Experts explain what you need to do before withdrawing $10,000 or more from your accounts.

Additionally, review the guidelines on high-yield accounts.

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Understand Federal Reporting Requirements

“When withdrawing a substantial amount like $10,000 or more from your checking account, one of the main concerns is the potential to trigger federal reporting requirements,” according to Abid Salahi, co-founder of Finly Wealtha credit card recommendation platform.

“Financial institutions are legally required to file a currency transaction report (CTR) for cash transactions exceeding $10,000,” he explained. “This reporting mechanism aims to combat money laundering and other illicit activities.”

Chris Demetriou, qualified accountant and co-founder of Archimedia Accountshad to accompany a manufacturing client that recently needed to derive a considerable portion of revenue from new equipment through this process.

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“Naturally, they were concerned about generating reports and getting scrutiny,” Demetriou said. “By examining the intricacies of regulations and best practices, I was able to assure you… that with proper planning, even six-figure transactions can be executed safely.

“While this may cause concern, the report itself usually goes nowhere – authorities are focused on real criminal cases, not ordinary citizens. However, it is still vital to avoid “structuring” by splitting amounts into transactions under $10,000. This not only conflicts with the spirit of the law, but may unnecessarily raise suspicion.”

Expect delays in your funds

Salahi said he has seen several cases where clients were caught off guard by this regulatory requirement and were unable to obtain funds on the day they wanted.

“After providing the necessary documentation and explaining the legitimate purpose of the withdrawal,” he said, “the transaction was eventually processed, but not without significant inconvenience and delays.”

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Keep a paper log

It is crucial to have a clear documentary record and a reasonable explanation for needs of this size, Demetriou said.

“At tax or audit time, a trail of legitimate invoices, receipts or contracts demonstrates that money is going toward a real cost, like a major home renovation,” he said. “Without reason, doubts may arise. So keep your paperwork in order.”

Salahi added: “This transparency helps ensure compliance with anti-money laundering regulations and facilitates a smoother transaction process.”

Speak directly to your bank

For peace of mind, Demetriou recommended speaking directly to banking professionals if you need to make a large withdrawal.

“Explain the plans factually and address any concerns they have upfront,” he said. “Reputable banks also don’t want illicit activity, so establishing trust and transparency upfront helps all parties.”

Salahi explained that most banks require at least 24 hours’ notice for withdrawals exceeding $10,000, which allows them to prepare the necessary cash reserves and complete the required documentation.

Consider the impact on your savings

Additionally, it’s important to consider the impact of withdrawing a large amount from your emergency fund, said David Rafalovsky, CEO of Oxygena comprehensive financial platform.

“A rule of thumb is to have enough savings to cover three to six months of living expenses,” he said. “Withdrawing a large amount can deplete this safety net, leaving you vulnerable in the event of unexpected financial emergencies.”

Review missed opportunities

It’s also important to think about the potential for lost financial opportunities if you withdraw so much money, Rafalovsky said.

“Funds in your checking account can earn interest in a savings or investment account,” he said. “When you withdraw a large amount, you not only lose the principal amount, but also the future growth it could have generated. This opportunity cost can significantly affect your long-term financial goals, such as retirement or purchasing a home.”

Avoid bank fees and penalties

Also, consider any potential fees or penalties associated with your withdrawal, Rafalovsky said.

“Some accounts have minimum balance requirements and falling below these limits can lead to monthly maintenance fees,” he said. “Additionally, if this withdrawal is intended for investment purposes, be aware of the timing and market conditions. A hasty decision can lead to entering the market at a less than ideal time, affecting the return on your investment.”

By following these important steps before a big withdrawal, you’ll have no trouble getting access to your own well-saved money.

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