Can I Deposit This Money Legally?
Can I Deposit This Money Legally?
Christy Bieber Sat, September 28, 2024 Moneywise
I lost faith in banks in 2009 — now I have $650K in cash sitting in a safe. Can I deposit this money legally?
Anyone who lived through the Great Recession remembers the tremendous economic turmoil that took place. Banks had made mortgage loans to unqualified borrowers, bundling those loans into mortgage-backed securities that were sold to investors. The entire house of cards collapsed as home prices began to fall and interest rates began to rise. Several major banks failed, the government was forced to bail out more and the stock market plummeted.
While the economy eventually recovered, many people became wary of financial institutions — with some people worried enough to withdraw their funds from banks and brokerage firms entirely.
If you're one of those people and have been hoarding cash since the Great Recession, you've sadly missed out on the chance to benefit from years of economic growth. While the average closing price for the Dow Jones Industrial Average was around $8,886 in 2009, the average in 2023 was $34,122, and has continued to rise in 2024.
For those who want to get in on the gains, it may be time to make a change. However, you'll need to understand the rules for doing so.
How To Deposit A Large Sum Of Money
If you've amassed a large sum of money at home instead of putting cash in the bank, you may be wondering if it's even possible to deposit it once you've had a change of heart.
The answer is yes, but there are some caveats.
Specifically, when you deposit over $10,000, your bank is required by the Bank Secrecy Act to report it to the Financial Crimes Enforcement Network. Your bank may ask some personal questions, including why you're depositing such a large sum, so you must be prepared to answer them.
To be clear, if you've done nothing wrong, earned the money legitimately and paid taxes on it, this reporting requirement shouldn't worry you. You just need to know about it so you aren't caught off-guard by the bank's queries.
What you don't want to do, though, is break up your big deposit into a series of smaller ones to evade reporting rules. This is called “structuring” and it's illegal even if you earned the money legitimately.
It’s also a good idea to call the bank in advance of making a large deposit. Showing up with $650,000 in cash could cause problems if the financial institution isn't prepared to handle that much all at once. Your bank can work with you to find a safe way to deposit the money.
You should also be aware that the Federal Deposit Insurance Corporation only insures up to $250,000 per person, per account, so simply depositing $650,000 into a bank account may not be the best move. You may want to put some money into different savings accounts or buy Certificates of Deposit or other investments with it so you don't risk losing funds above $250,000 if another bank collapse happens sometime in the future.
TO READ MORE: https://www.yahoo.com/finance/news/lost-faith-banks-2009-now-115000682.html