What to do with large sum of cash money?

**KTP** · 09-30-2009, 02:18 PM

[QUOTE=Gemini9981;237319] now has a lot of cash in safe deposit boxes she would like to invest (about 100,000) but does not know how and is scared to get taxed or in trouble with the government if she deposits it into an account. QUOTE]

uhm...either the money is from a legit source and she has no worries with the government, or something fishy is going on?

It is going to be pretty hard to invest the money using any normal means without the government finding out she has it. If she declared taxes and all of the proper things when she earned it, no problem. They don't tax people on net worth....yet.

**Gemini9981** · 09-30-2009, 02:50 PM

RE

I agree with everything you said except I am not talking about myself but like I wrote a close relative that I tried to advice against doing what she did. She now finally changed her accountant like I had advised her too when she first started the buisness and realizes she should not have kept the cash not in a bank account. But what can she do now to fix her situation? If this wasn't such a close relative I would not care but I feel I need to help her because if she loses all her cash I will be responsible as she is my mom.

**Gemini9981** · 09-30-2009, 02:53 PM

RE

And I just wanted to add one more thing, the money is from a legit buisness, a restaurant. Her accountant did not know how to do taxes for restaurants. She now has one that does.

**disneysteve** · 09-30-2009, 03:00 PM

I agree with KTP. If she properly reported this money as she earned it and payed the appropriate taxes, investing it now really isn't a major issue. However, there are federal laws that require banks and financial institutions to report cash transactions above a certain amount. If she walks into the bank with 10K in cash, a report will be filed. Nothing bad will happen. She may just have to document where the money came from at some point if anyone asks.

I'm not sure if brokerages or mutual fund companies will accept cash. She may have to put it in the bank first and then move it around from there.

My suggestion would be for her to start spending it to pay her every day expenses. Put away the credit card and start paying cash for groceries, gas, medical bills, auto repair, hair salon, restaurants, travel, etc. Depending on her lifestyle, she could probably go through a couple thousand per month. Then she could take the money she currently earns and use that to fund the retirement account and other savings. At 55, she can put $6,000/year into a Roth. If she is still employed, she could fund a 401k or other plan (SEP-IRA) if self-employed.

**disneysteve** · 09-30-2009, 03:02 PM

Originally posted by Gemini9981 View Post

And I just wanted to add one more thing, the money is from a legit buisness

Did she report the money and pay taxes on it when it was earned?

**creditcardfree** · 09-30-2009, 03:17 PM

Yes, a bank account is a good idea. Maybe she needs to start slow and invest a little at a time, rather than a lump sum. She does need to stay within her risk tolerance.

**markusk** · 09-30-2009, 08:02 PM

Of course I don't condone anyone not paying their fair share of taxes, but the OP was asking a specific question.

I would find out what the amount is that automatically triggers the cash transaction report to the government -- I think ostensibly it was started to prevent money laundering (of drug money) -- and start depositing something less than that amount each week or month into a bank account or a mutual fund account retirement account.

For example, if the government is notified whenever a transaction is over 10K, then move the money one time at $9,900, and another time $9,500 -- you get the idea.

**am_vanquish** · 10-01-2009, 05:00 AM

Originally posted by markusk View Post

Of course I don't condone anyone not paying their fair share of taxes, but the OP was asking a specific question.

I would find out what the amount is that automatically triggers the cash transaction report to the government -- I think ostensibly it was started to prevent money laundering (of drug money) -- and start depositing something less than that amount each week or month into a bank account or a mutual fund account retirement account.

For example, if the government is notified whenever a transaction is over 10K, then move the money one time at $9,900, and another time $9,500 -- you get the idea.

Note that a series of transactions made on semi-regular basis within a reasonable range of the 10k rule will still raise eyebrows. The bank is not required to report it automatically, but the IRS isn't stupid (and neither are actual money launderers - these things have been done before). Depositing varying amounts around 9k (just under the trigger of 10k) each month for a year will look suspicious.

I personally think she needs to just "come clean" - share the entire situation with a qualified professional and get it all straightened out. That way there's no issues going forward.

In regards to moving the cash into bank accounts, the most reasonable thing I can think of is what DisneySteve already suggested. Pay cash for everything, spread out any "new" income among FDIC savings accounts, IRA, 401(k), etc.

**disneysteve** · 10-01-2009, 05:50 AM

Originally posted by am_vanquish View Post

Note that a series of transactions made on semi-regular basis within a reasonable range of the 10k rule will still raise eyebrows. The bank is not required to report it automatically, but the IRS isn't stupid (and neither are actual money launderers - these things have been done before). Depositing varying amounts around 9k (just under the trigger of 10k) each month for a year will look suspicious.

Agreed. My cousin is the compliance offer for a bank and part of his job is to track suspicious activity like this. He's told me a few stories over the years along these lines.

**Joan.of.the.Arch** · 10-01-2009, 07:31 AM

At the very least, she could rent a safe deposit box in a bank vault and put her cash in there. Take her to a bank and let her see the huge vault, the lock boxes, and the process of signing in, (usually?) double keys needed to remove a box, and privacy available to deal with he contents of one's safe deposit box.

Of course this will cost your mom rental money, rather than earn her further money.

**boosami** · 10-01-2009, 10:13 AM

If she's afraid the bank will steal/lose/misuse her money, I doubt she wants to invest it in anything. Banks are insured, investments are not. Even someone who has "distrust" for banks can surely see that... Unless she gets over her bank-phobia, she will just need to spend the cash the rest of her life. It will not be a problem if the money is legitimate and taxes have been paid on it (which I'm not sure of since you say the former accountant did not know how to do taxes for the business).

**boosami** · 10-01-2009, 10:16 AM

Originally posted by disneysteve View Post

Agreed. My cousin is the compliance offer for a bank and part of his job is to track suspicious activity like this. He's told me a few stories over the years along these lines.

In fact, there are two different forms the banks fill out for this type of thing: one is the standard "over $10,000" deposit form for normal occurances. The other is a "suspicious activity" form. They might fill out both of these for a large transation that looks questionable... but they will definitely fill one out for suspicious activity if you try to hide it by splitting it up into $9,900 transactions.

**StockTrader6080** · 10-02-2009, 08:07 PM

Many stocks are at an all time low. Look at Citibank, and AIG.

Surely some of the funds should go into some beaten down giants.

Keith

**cptacek** · 10-03-2009, 10:07 PM

But she is NOT laundering money! Deposit it (maybe talk to the compliance officer first) and don't think another thing about it. These rules are to catch drug dealers. If she didn't deal drugs, no problem.

What to do with large sum of cash money?