Money market accounts come in two forms: money market mutual funds and money market deposit accounts. However, you can cash in either of these account types at any time. Money market mutual funds contain low-risk securities such as short-term treasury bonds. Shareholders receive regular interest payments while the price of a share generally remains steady at $1. Money market deposit accounts work similarly except that these deposit accounts are offered by banks instead of investment firms and are therefore federally insured. Consequently, the procedures for cashing in a money market mutual funds are different from the procedures for cashing in your money market bank account.
Money Market Mutual Fund
Review your most recent money market statement to determine when the fund makes the monthly interest payments. If you want to maximize your returns, you should delay the sale of your shares until you have received the next monthly interest payment. However, if you are in a high tax bracket, you may wish to sell your shares before the next interest payment causes your tax bill to rise.
Contact your broker and instruct the broker to sell all of your shares. Ask your broker for the current account balance. The balance should match the number of shares you have although in some instances, money market shares "break the buck." This occurs when the price of a share drops below $1.
Review the trade receipt for accuracy. You can ask your broker to mail you a check or to wire the funds into your bank account. You can leave the cash from the share sale in your brokerage account if you wish to reinvest the money.
Money Market Deposit Account
Locate your last money market deposit account statement. Compare the transactions listed on your statement with the transactions written in your check register. You cannot close the account if you have any outstanding transactions.
Contact your employer, pension provider and any other entity that makes direct deposits into your account or takes automatic withdrawals from your account. Explain that you intend to close the account. Provide these service providers and other entities with an alternative account number so that you can continue to receive your income payments and pay your bills electronically.
Go to the bank. Show a banker a form of identification and provide the banker with your account number. Complete a withdrawal slip or one of your own money market account checks to withdraw all of the funds from the account.
Instruct the banker to close the account after you have completed your withdrawal. Take your receipt and make sure the amount printed on the receipt corresponds to the amount of money that you received.
Most banks assess a penalty fee if the balance in a money market deposit account falls below a certain level. If you intend to leave the account with a zero balance for a period of time, you should simply close the account and then open a new account so as to avoid paying these fees.
Many investors confuse money market mutual funds with money market deposit accounts and believe that both investment types are backed by the federal government. Money market deposit accounts are insured up to $250,000, per account holder which means that you are protected if your bank goes bankrupt. In 2009, the federal government started to guarantee money market mutual funds in a bid to restore confidence in the market after several banks and investment firms became insolvent. However, in September 2009, the federal government's temporary guarantee program expired so money market mutual funds are no longer federally guaranteed.
- Securities and Exchange Commission: Money Market Funds
- University Federal Credit Union: Regulation DFAQs
- Bankrate.com; Money Market Fund Investing; Don Taylor
- Commodity Futures Trading Commission; Money Market Deposit Accounts and Now Accounts; December 2000
- FINRA: Treasury's Guarantee Program for Money Market Mutual Funds: What You Should Know
- Bankrate.com: The Basics of Money Market Fund Investing