When Do You Pay Taxes on Money in Your IRA?

By: Steven Porrello |
Updated
Sept. 29, 2023– First published on Sept. 29, 2023

Withdrawing money from your checking or savings account may not seem like a suspicious activity. After all, it’s your money. Even if it’s a large amount, like $10,000, who’s to say withdrawing it would call for an investigation?Turns out, withdrawing $10,000 or more from your checking or savings will prompt your bank to file a report with the Financial Crimes Enforcement Unit (FinCEN). It sounds more serious than it actually is, but if you withdraw $10,000 frequently enough — or worse: break up $10,000 into smaller withdrawals — you could find yourself under legal scrutiny. To avoid any problems with FinCEN, here’s what you should know.Why banks report withdrawals of $10,000 or moreEver since the Bank Secrecy Act of 1970, banks have been required to report any transaction involving $10,000 or more to the federal government, whether it’s a cash deposit or a withdrawal. Often, a bank’s software will automatically file a Currency Transaction Report (CTR) electronically for transactions that exceed $10,000, even if you’re not aware of it.Though it might seem like a violation of your privacy, the Bank Secrecy Act helps the federal government track and prevent financial crimes, like money laundering. When banks fail to report large cash transactions, criminal and suspicious activities can fly under the radar. For instance, between 2004 and 2007, the bank Wachovia — now a part of Wells Fargo — allowed about $400 billion in drug cartel money to flow through its banks largely because it failed to report transactions to the federal government.When a $10,000 withdrawal can become a problemTo be clear, a $10,000 withdrawal isn’t a criminal activity per se. In fact, FINCen likely receives so many uninteresting CTRs a day, you won’t trigger suspicion through a large withdrawal alone. But there are some activities that will put greater vigilance on your bank account. The most common is called structuring.Structuring involves breaking up a large cash transaction, like a $10,000 withdrawal, into smaller parts specifically to evade the Bank Secrecy Act’s reporting requirements. For instance, if you withdraw $12,000 in total from your checking account, but break it into three $4,000 withdrawals, the transaction might be seen as structuring.Of course, you could have good reasons for making a series of withdrawals totaling $10,000 or more. But if you do it frequently enough, your bank could report it as suspicious activity. Once flagged, structuring can embroil you in a legal investigation. At that point, if you’re caught intentionally evading a bank’s reporting requirements — even if you’re just a private person who doesn’t want the government keeping tabs on your life — you could face criminal or financial charges.How to safely (and legally) withdraw $10,000 or moreThe best way to withdraw $10,000 or more is to simply do it. Don’t try to break it into smaller installments, or get smart and Venmo your friend half and have them withdraw it for you. If you don’t want your activities tracked, don’t do anything suspicious that will make your bank report it to FINCen.Truthfully, unless you are engaging in something illegal, you have nothing to worry about. FINCen knows large withdrawals and deposits happen everyday, and it’s not concerned with legal cash flows. It’s only when you behave suspiciously that you could find yourself under investigation.If you’re concerned, you can always talk to your bank. Otherwise, just keep withdrawing as you normally would, and you won’t run into any serious financial problems.

By: Natasha Etzel |
Updated
Oct. 4, 2023– First published on Oct. 4, 2023

A bank account is an excellent place to keep your money so it’s organized and readily available when needed. Many people keep their cash in a checking account. But, while you want to stash enough money in your checking account to cover your bills and everyday expenses, you want to avoid keeping all of your cash there. I’ll explain why here, and suggest a better place to stash your extra savings.Don’t miss out on interestThe average checking account doesn’t accrue interest. That means you won’t get rewarded for keeping money in your bank account. Instead of keeping all your cash in your checking account, you should only keep enough to cover your monthly expenses. You may want to keep a bit more than just enough to cover your bills. That way, you’ll be covered if you have an unexpected charge or a more costly bill than anticipated. How much extra should you have? It depends. For some people, a couple hundred extra dollars may be ideal. But for others, it may be a good idea to include a few hundred or up to an extra $1,000 in their checking accounts for extra wiggle room.But don’t keep every last dollar you have in your checking account. If you do, you’ll miss out on interest. Instead, move your extra savings into a bank account that accrues interest. With an interest-earning bank account, you’ll get rewarded as your cash sits in the bank.  You could earn money with a savings accountMany people keep extra cash in a savings account. Review the bank’s annual percentage yield (APY) when considering a new savings account. This rate is the amount of money or interest you’ll earn over a year. The higher the APY, the more money you can make. You can take advantage of an attractive interest rate by opening a high-yield savings account. At the time of writing, the bank accounts on our best high-yield savings accounts list offer APYs ranging from 4.30% to 5.26%. If you have a significant amount of extra cash and keep it in an account like this, you can earn money without doing extra work. $5,000 in savings accumulates this much interest To determine how much interest you can earn by moving your extra cash to a savings account, multiply your initial deposit by the APY your bank account offers. This will show you how much interest you can earn by keeping your money in the bank for a year. Let’s imagine you have $5,000 extra sitting in your checking account right now. If you instead move that money to a high-yield savings account with an APY of 5% and you keep it in the bank for an entire year (and your APY doesn’t change; note that banks can raise or lower APYs at any time), you’ll earn $250. That’s much better than making $0 by keeping your savings in a checking account that doesn’t accrue interest. Now you can see why it pays to avoid keeping all your money in a checking account. You can earn extra money from interest by keeping your spare cash in a savings account that offers interest. For additional tips like this, check out our free personal finance resources. 

By: Maurie Backman |
Updated
Sept. 13, 2023– First published on Sept. 13, 2023

At some point in 2022, I discovered Aldi and began shopping there weekly. I found that I was able to save money on my grocery bill by purchasing certain produce items there. And since I happen to have an Aldi adjacent to my local Costco, it wasn’t particularly out of my way.But over the past few months, I’ve become less enamored with Aldi. Here’s why.1. The selection is just too limitedAldi — at least near me — is a minimally stocked grocery store. The shelves aren’t loaded the way they are at my nearby ShopRite and Stop & Shop.To be fair, this was the case when I first started shopping there. But because there’s just not a lot of selection, I’m generally limited to only buying a few items when I pop into Aldi.Not so long ago, I was running into Aldi for some fruit, which I usually buy there, and I needed to grab shredded cheddar cheese. Normally, I get that at Costco, but I didn’t want to run next door to Costco and wait in a line for cheese alone. Unfortunately, though, Aldi didn’t have the cheese I needed, so I had to make an extra stop anyway.2. The inventory is too inconsistentNot only is there a limited selection of food items I can buy at Aldi, but sometimes, I can’t even find the five or six things I’m looking for. Aldi was once my go-to source for avocados, since it’s an expensive purchase and Aldi tends to sell them for less than Costco (at least in my area). But the last few times I stopped at Aldi, avocados weren’t in stock.And that’s happened to me with other things, too. Over the past several months, I’ve struggled to find everything from cucumbers to strawberries at Aldi as well.3. What the store saves me on groceries, I lose via lost working hoursShopping at Aldi still has the potential to save me a little money on groceries. At a time when supermarket prices are up 3.6% on an annual basis, that helps.The problem, however, is that even though Aldi is right near Costco in my neighborhood, thereby allowing me to combine those trips, it still takes time to visit an extra supermarket. I have to find parking, wait in a checkout line, and spend time searching the shelves.While it’s nice to save $2 here and $3 there, the reality is that a stop at Aldi might cost me 20 or more minutes of work — especially when I don’t manage to find the things I need. And losing out on that work time often means forgoing more than $2 or $3 of income. So from a time perspective, it’s just not worth it.Shopping at Aldi could make sense for a lot of people. If you’re someone with flexibility in your schedule and grocery list, and you’re not so picky about the brands you bring home, then it could pay to spend the time visiting Aldi, even if you don’t always manage to find all the things you need. But I’ve reached the point where shopping at Aldi makes less and less sense for me, so I’ll most likely stop going there unless it’s a one-off basis.

By: Steven Porrello |
Updated
Sept. 29, 2023– First published on Sept. 29, 2023

Costco gift cards are one of the warehouse’s best deals. Costco often will add 10% to 30% of value when you buy its gift cards in a bundle. It would be one thing if the gift cards were for places you’d never shop, like Bed, Bath, and Beyond (R.I.P.). But Costco gift cards are surprisingly varied and include many restaurants and retailers you’re probably already spending money with.So if you, like me, pinch pennies for your finances, here are seven gift cards you should always buy at Costco.1. Jiffy LubeCostco will add 25% of value when you buy a set of two $50 Jiffy Lube eGift cards for $74.99. While Jiffy Lube doesn’t offer the cheapest oil change on the market (Walmart will likely take the gold for that), its technicians do go through rigorous training via the Jiffy Lube University to ensure no accidental damage is done to your vehicle. If quality trumps price for your vehicle, this deal will save you $25 off your next oil change (limit of five per membership).2. Alaska AirlinesPacific Northwesterners will appreciate this deal — Costco will give you a $500 eCertificate to Alaska Airlines for $449.99. That comes to 10% off your next Alaska Airlines flight (limit of four per membership).3. Southwest AirlinesIf that was the first time you’d heard of Alaska Airlines, here’s a gift card package with a more familiar airline: Southwest. Costco will add 10% of value when you buy $500 of Southwest Airlines gift cards for only $449.99.4. Cinemark TheatresIn a great deal for moviegoers, you can buy a $50 Cinemark Theatres eGift card for only $39.99 at Costco. That’s an extra 20% of value that you can use for movie tickets, food, drinks, or merchandise (limit of 10 per membership).5. Miller PaintPainting your house ain’t cheap. Interior paint jobs will cost about $2 to $6 per square foot, according to the home improvement site HomeAdvisor, while exterior paint jobs can cost about $1.50 to $4 per square foot. To ease those costs, Costco will sell you $100 of Miller Paint gift cards for $69.99 — a whopping 30% of extra value.6. SpafinderIf you thought the cost of painting your house was bad, imagine how your back will feel after hours of painting walls. To ease that pain, Costco has an irresistible gift card deal: two $50 eGift cards for $79.99 to be used at thousands of spas and salons across the country. You can also use them at participating yoga and fitness studios (limit of 10 per membership).7. Synergy RestaurantsOne of the more interesting gift card packages I’ve come across, this extremely lucrative deal — two $50 eGift cards for a sticker price of $69.99 — will help you foot the bill at hundreds of local restaurants in numerous cities across Arizona, California, Colorado, Nevada, New Mexico, and Texas. This is perhaps one of the best deals I’ve seen and can be perfect for locals in those states and travelers who are visiting them.Most members don’t realize how many gift cards Costco actually sells. In fact, these seven packages only scratch the surface. Next time you’re at your local Costco warehouse, be on the lookout for gift card packages, which are often found at the ends of aisles. You might find a deal you can’t get anywhere else.

Costco is a favorite among bargain hunters. But because it’s a place where you typically buy in bulk, it’s often not great when you only want to spend a few bucks. Believe it or not, though, there are some deals at Costco for $10 or less. Here are five amazing Costco finds that will set you back no more than $10.1. Rotisserie chickenNot surprisingly, the $4.99 rotisserie chicken tops this list. Costco debuted its famed bird for $4.99 way back in 1994. It briefly raised the price by $1 during the Great Recession in 2008, then knocked it back down to $4.99 one year later. Had Costco raised its prices to keep up with inflation since 1994, that chicken would cost $10.48 today.Costco’s rotisserie chicken will always be a fan favorite for those looking for an effortless dinner. Just be aware: Costco keeps the prices low because its rotisserie chicken is what’s called a loss leader. The warehouse giant is willing to lose money selling them because it knows it can get customers into stores, where they’ll probably buy more than just a chicken.2. Hot dog and soda comboCostco has raised the prices of many of its food court items in recent years, but the price of one perennial favorite shows no signs of budging: the hot dog and soda combo, which has cost $1.50 since it debuted in 1985. Adjusted for inflation, the hot dog and soda combo should cost $4.28. Last year, during a quarterly earnings call, Costco chief financial officer Richard Galanti said the warehouse giant could keep the $1.50 price point “forever.”3. Kirkland Signature Creamy Almond ButterYou can use almond butter as a salad dressing ingredient, slather it on toast, put it in baked goods, or just eat it straight from the jar. If you’re the type who likes to devour almond butter by the spoonful, you don’t want to pass up a 27-ounce jar of Kirkland Signature Creamy Almond Butter, available for just $7.99. That works out to less than $0.30 per ounce. By comparison, a 16-ounce jar of Trader Joe’s Creamy Almond Butter Salted costs $6.99.4. Olde Thompson Kosher Sea Salt, 5 lbsSea salt has plenty of uses that go beyond cooking. You can use it for cleaning, as an exfoliant for your skin, and sprinkle it around your garden to keep unwanted bugs away. For just $5.99, you can score a 5-pound jar of Olde Thompson Kosher Sea Salt and keep it handy for all your household and kitchen needs.5. Bisquick Pancake & Baking Mix, 96 OuncesBisquick is another one of those things that’s handy to keep in your pantry. You can use it to whip up a quick batch of pancakes or waffles for breakfast or keep it on hand for a variety of baked good recipes. A 96-ounce box of Bisquick is available at Costco for $8.89. It’s normally priced at $10.99, but there’s a $2.10 manufacturer’s discount that’s good through Oct. 8, 2023.What are the best deals at Costco?Since Costco tends to sell large quantities, you’ll typically find that a lot of the best deals cost well above $10. Regardless of the exact price, it usually makes sense to buy products at Costco that have a long shelf life. For example, even if you find great deals on fresh produce and milk, you probably don’t want to load up on these items unless you’re feeding a large crowd, as they’ll go bad quickly.Also, make sure you look beyond the grocery department for savings. For example, getting your prescriptions from Costco Pharmacy or using Costco to fill up your gas tank could also save you money.If you want to maximize the benefits of your membership, try shopping with a Visa credit card that offers rewards. (Costco only accepts Visa credit cards.) That way you can earn travel rewards or cash back when you load up on groceries and other necessities.