If you withdraw large amounts of cash from savings, the Internal Revenue Service doesn't particularly care. You can do whatever you like with your money, provided you pay taxes on it – and as long as what you're doing isn't illegal. Although the IRS doesn't monitor your transactions, the U.S. Department of the Treasury does. Federal law requires your bank to report to the Financial Crimes Enforcement Network if you engage in certain transactions – even if you mean no harm – due to terrorist concerns and money laundering issues.
The U.S. Department of the Treasury, not the IRS, requires banks to report deposits and withdrawals of $10,000 or more from any savings account.
Transactions of less than $2,000 don't typically trigger reporting. If you take out more than that, and if you behave in such a way as to "alarm" bank personnel – for example, you bribe the teller or admit to a crime – the transaction will be reported. Otherwise, it's doubtful that you'll have any problem, especially if your transaction is similar to others you've made in the past. If you're depositing or withdrawing $10,000 or more in cash – regardless of whether you behave suspiciously – this will typically also be reported. Multiple withdrawals totaling $10,000 or more also requiring reporting if they occur on the same day. Financial institutions must report the purchase of traveler's checks or money orders as well if you use cash to purchase more than $3,000 worth.
Warnings on Structuring
FinCEN also instructs banks to be observant for signs of "structuring" – behavior that might indicate someone is trying to get around the usual reporting rules. For example, you might withdraw $6,000 in cash because you're leaving for vacation. Unaware that you've done so, your spouse might do the same thing a few hours later. But this innocent mistake would trigger a report, because the two withdrawals total more than $10,000 from the same account, even though two separate people made them. Structuring usually involves the deliberate use of multiple smaller transactions to avoid any single transaction that will trip a reporting flag, especially if they're made at different branches of the same bank.
Banking activity can result in two different kinds of reports, and the filing requirements are different for each. Suspicious activity reports relate to $2,000-limit transactions involving alarming activity. The bank has 30 days to file this report, and, by law, it can't let you know that it's done so. A currency transaction report applies to transactions of $10,000 or more. The bank has only 15 days to file a report of this nature, and it must keep copies of such reports for five years.
Even the federal government understands that some businesses engage in large cash transactions as a matter of course. If banks had to report every such transaction for these business enterprises, they'd be buried in paperwork and it would be grossly unfair to their customers. FinCEN exempts some commercial and retail accounts from reporting requirements. If you own such a business and you're unsure if you qualify for exemption, consult with your bank or an attorney to find out where you stand.
Beverly Bird has been writing professionally for over 30 years. She specializes in personal finance and w, bankruptcy, and she writes as the tax expert for The Balance.