On money

Personal Finance editor HELEN HUNTLEY E-mail: Click here Archive

© St. Petersburg Times
published December 30, 2001

Bank policy may limit immediate withdrawal amount

Q. I tried to withdraw $10,000 in cash from my bank account and the bank wouldn't let me. Are there legal limits on how much you can withdraw in one day?

A. There is no law that would stop you from withdrawing the cash, but you might have run up against a bank policy on the matter.

"Most banks would do that for any customer that asked, but they might use some caution to make sure the customer wasn't being conned into something," said Douglas Winton, chief operating officer for Mercantile Bank in St. Petersburg.

If you've never asked for a large cash withdrawal in the past, someone at the bank might have thought you were about to become the victim of a crime. After all, carrying around a duffel bag of cash is not safe. When you want a large sum to make a major purchase, it would be smarter to ask the bank for a cashier's check.

Some banks do ask for one or two days' notice for a large cash withdrawal. That's because for security reasons, the bank might not keep that much cash at the teller line. Arrangements might have to be made to take the cash out of the vault at the branch or to have the money shipped in.

Finally, a bank would want to be sure that you had enough in your account to cover the withdrawal. If you recently deposited a check, the bank might have been waiting for it to clear.

The bottom line is that it is your money and you should be able to get the cash if you want it. I recommend that you discuss your cash needs with the bank's branch manager and that you move your account if you can't resolve the situation to your satisfaction.

Although there is no law against big cash withdrawals, you and the bank would have to fill out a form reporting the transaction. That's because the government is trying to discourage money laundering.

Q. My parents helped me sign up for a Roth IRA for a Christmas present. They got me a bank CD that pays 1.25 percent interest, which isn't exactly what I had in mind when I asked for a Roth IRA. I was expecting to be able to invest in stocks, but they could only afford to contribute $100.

What can you tell me about Roth IRAs that are only done with CDs? The CD I got has a 16-month maturity with a variable rate. After that I was told I can make it fixed rate if I want. Should I stick with this IRA?

A. It's great that you are thinking ahead. A Roth IRA is a wonderful idea for a young person such as you because you will get decades of tax-free compounding. If your parents are only able to make a small contribution, it will be up to you to build your IRA by adding to it from your earnings.

An IRA is simply a tax-advantaged wrapper around an investment, most commonly a CD, a mutual fund or a brokerage account containing a mix of investments. Because you got a CD, you are stuck with the terms of the CD contract. That probably includes a penalty if you cash out of your CD before maturity. However, all is not lost.

Find out if you can add to this CD. If so, it could be a good place for you to accumulate money you could use to open a mutual fund account when your CD matures. Once you have accumulated at least $500, you will have more options. Fund companies have minimum account sizes, which vary widely but which usually are smaller for IRAs than for other types of accounts. Some will waive the minimum requirement if you sign up for automatic investments from a checking account.

You have until April 15 to contribute money for the 2001 tax year, then you can get to work on 2002. The current limit on annual contributions is $2,000 or total earned income, whichever is less. Next year that will go up to $3,000 ($3,500 for people 50 or older).

Online money map

How much was that $100 salary you earned 40 years ago really worth? A whopping $593.31 in today's dollars, according to the Bureau of Labor Statistics. That's one of many things you can find out on the BLS Web site. Click on "inflation calculator" and check the numbers for any year back to 1913.

-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

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