Is Moving Large Amounts of Cash a Red Flag?

[Drake3287]

I've often wondered about, and even admittedly worried about this question pertaining to the IRS.

Does moving around large sums of cash from bank to bank (such as chasing CD offers or I Bonds) raise concerns from the IRS? I'm talking larger amounts such as $50k to $100k. I realize banks are required to report transactions over $10k.

Besides being well vested in different investments along with having a healthy pension, I've been a "saver" all my adult life and have socked away well over a half million in cash which is currently in different 5% CD's or I Bonds. But, every time I move these large sums around I often wonder if it'll raise a red flag somewhere and at some point will I have to prove how I acquired it? (we're talking 40 years of old fashion saving along with old checkbook registers).

Almost all of this cash has come from a life long habit of simply saving a portion of my paycheck or retirement check for savings/retirement. It's all 100% legally earned money which was reported and taxed along the way.

And just a note, I realize cash isn't the greatest investment or maybe even recommended around here but years ago I hit my magic number for retirement savings and at that point stopped further stock market investing and simply kept with my guaranteed and safe cash savings. My other investments to date haven't been touched simply because I haven't needed the money. I easily live off my pension but realize I'll have to start withdrawing money after age 72.

 

[youbet]

You're fine. Relax.

 

[Sunset]

Just when you do it between countries and it's not the IRS that is interested, but other agencies.

I would always keep below the $10K limit when crossing the border so it wouldn't be seized.

 

[MarieIG]

I have no direct knowledge of the internal workings of the IRS - however, I would "presume" moving funds from accounts with identical ownership, is less of a "red flag." Due to the rise in interest rates over the past year, I suspect there has been a lot of activity among individuals chasing CD / treasury rates (at least if this forum is any indication ). I do recall moving 50k at a clip, but do not recall moving 100k+ other than in conjunction with the sale of our home. There was no issue with the transfer of 50k.

When I moved the proceeds from the sale of our home, the bank, and later Vanguard, queried about the source of the funds, i.e. presented a check off list: sale of a business, property residence, etc.

 

[MichaelB]

You're fine. Relax.

Yes to both.

Moving large sums of cash in and out of the banking system raises a red flag, but moving cash within the banking system is “business as usual”

 

[audreyh1]

Just when you do it between countries and it's not the IRS that is interested, but other agencies.

+1

 

[Car-Guy]

I've often wondered about, and even admittedly worried about this question pertaining to the IRS.

Does moving around large sums of cash from bank to bank (such as chasing CD offers or I Bonds) raise concerns from the IRS? I'm talking larger amounts such as $50k to $100k. I realize banks are required to report transactions over $10k.

I think CTR's and SAR's are only used when you take/put (>10k cash) in or out of bank. (Not transferring it between them.) In anycase I've done it countless times (both ways) and never had any problems.


EDIT: Unless you consider a hold being placed on your funds when transferring money between banks. I recently transferred (ACH) 50k from my local bank directly to my Schwab account and they put a four day hold on my funds... I mean does Schwab think my bank sent them funds I don't have?

Moving large sums of cash in and out of the banking system raises a red flag, but moving cash within the banking system is “business as usual”

That's the way I understand it too.

 

[youbet]

.


EDIT: Unless you consider a hold being placed on your funds when transferring money between banks. I recently transferred (ACH) 50k from my local bank directly to my Schwab account and they put a four day hold on my funds... I mean does Schwab think my bank sent them funds I don't have?

But that "hold" was only regarding withdrawals, right? You could immediately deploy the money within Schwab as you wished. They're just CYA in case whoever you transferred the money from can't or doesn't actually make the payment for whatever reason. The solvency of your bank is your issue, not theirs. It has nothing to do with your bank sending Schwab funds you don't have. It's about your bank sending them funds in your name that they don't have.

 

[Mr. Tightwad]

How is the weather in the Cayman Islands this time of year?

 

[audreyh1]

EDIT: Unless you consider a hold being placed on your funds when transferring money between banks. I recently transferred (ACH) 50k from my local bank directly to my Schwab account and they put a four day hold on my funds... I mean does Schwab think my bank sent them funds I don't have?

Sort of, waiting to make sure of no errors. If you initiate the transfer at Schwab, you probably won’t experience this hold is my guess. Whoever initiates can pull funds back due to an error is my understanding.

I always initiate transfers (either direction) from my Fidelity brokerage, and I never see holds.

 

[Alan]

Just when you do it between countries and it's not the IRS that is interested, but other agencies.

I would always keep below the $10K limit when crossing the border so it wouldn't be seized.

As long it is declared then you can carry more than $10k cash outside the country. Moving large, and even very large quantities of cash of out country is also no problem as long as the banks are notified. You may be asked to show where it has come from as part of money laundering checks. For example last month our daughter paid hundreds of thousands of dollars to a solicitor in England to pay for the house she was buying. The money went from her US Chase bank account via Wise direct to the solicitor. She did have to provide copies of the sale documents of her house in the USA to satisfy money laundering laws.

We did similar in 2017 when buying our house here, and I transfer 10’s of thousands of dollars from the USA to England every year. I used to be prompted after each transaction as to where it was coming from but it has been a long time since I was last asked. Last year I transferred a single lump sum of over $50k through Wise to pay for a new roof and a new car and was never asked why.

 

[Time2]

Last year I transferred a single lump sum of over $50k through Wise to pay for a new roof and a new car

Must have been a rather inexpensive car!

 

[Car-Guy]

But that "hold" was only regarding withdrawals, right? You could immediately deploy the money within Schwab as you wished.

Nope, I could see it in my account as "pending" but it wasn't investable.

Sort of, waiting to make sure of no errors. If you initiate the transfer at Schwab, you probably won’t experience this hold is my guess. Whoever initiates can pull funds back due to an error is my understanding.

I always initiate transfers (either direction) from my Fidelity brokerage, and I never see holds.

When I transfer funds from Schwab to my bank, it's available the next day. Just not when I transfer from my bank to Schwab. Crazy, but I've learned to expect it.

You'd think with a customer that has been with them over 40 years and has maintained at least a 1m balance for the last 20 years of that time, that they could be trusted with a 50k transfer... But I'm sure it's just policy and not personal.

 

[audreyh1]

Where did you initiate the transfer?

 

[Car-Guy]

^^^^^
From Schwab on-line, it was a "pull" VIA the normal ACH process...

 

[audreyh1]

^^^^^
From Schwab, it was a "pull"...

OK - then I really can’t explain any hold. I have never seen this at Fidelity. Always immediately available from a pull once received, even for transfer elsewhere.

 

[Sunset]

As long it is declared then you can carry more than $10k cash outside the country. Moving large, and even very large quantities of cash of out country is also no problem as long as the banks are notified. You may be asked to show where it has come from as part of money laundering checks. For example last month our daughter paid hundreds of thousands of dollars to a solicitor in England to pay for the house she was buying. The money went from her US Chase bank account via Wise direct to the solicitor. She did have to provide copies of the sale documents of her house in the USA to satisfy money laundering laws.

We did similar in 2017 when buying our house here, and I transfer 10’s of thousands of dollars from the USA to England every year. I used to be prompted after each transaction as to where it was coming from but it has been a long time since I was last asked. Last year I transferred a single lump sum of over $50k through Wise to pay for a new roof and a new car and was never asked why.

I never am concerned about institution to institution transfers.

But while it's true you can carry actual cash across the border in any amount, when it's over $10K it must be declared. The tricky part is should the Customs Officer not trust your answer, it can be seized right there.
Then you can apply to appeal the seizure via a legal process.... which even if it goes well, will take months or more.

 

[Car-Guy]

OK - then I really can’t explain any hold. I have never seen this at Fidelity. Always immediately available from a pull, even for transfer elsewhere.

It's not the first time this has happened and I've learned (and now expect) anything over 5k is held for "up to" four business days. Under 5k and it's available the next day, IIRC.

 

[erkevin]

By law, banks have so many days to complete a transfer. During the days the transaction is "floating", you are not making any money on those funds. But guess who is.

 

[Car-Guy]

I only need one guess!

 

[RenoJay]

I routinely move high six figure and low seven figure amounts because I do private lending. Knock on wood, it has not caused any IRS issues in the 10 years I’ve been doing it.

 

[Drake3287]

Thanks for the insight. Not unlike having taxes audited by the IRS, I always wondered what would happen if I had to prove where my larger cash savings came from.

Sort of hard to explain and prove it when you simply saved a few hundred dollars each month for 35 or 40 years. Went ahead and transferred another larger amount today. Hopefully no issues down the road.

 

[audreyh1]

No it’s not. You have tax records showing your earned income. You have bank statements, SS earnings records that go back decades. There is a trail. You don’t stand out, other people have made far larger transfers between institutions than you.

 

[retire48in2018]

When I’ve moved large sums from bank to Fido - they are instantly available to invest. It shows in detail that funds are still in process for couple days - but instantly available.

Those are $50k - $200k like transfers.

When I’ve moved $500k - $1M - via a bank check (rollover funds) - also instantly available when shipping company states check was received. Fido must have instantly opened and scanned in check. I did have the paperwork already done on their side - and money went into investments as directed instantly. No wait

 

[HenryD]

I've recently had to provide demographic info, attest to source of funds, a photocopy of my passport, three months of bank statements, a letter from my bank manager, and the MT103 receipt to move less than $1500 to Central America.