Most banks allow customers to make transactions freely. However, banks and government organizations have the authority to place restrictions on bank accounts. A restricted account may limit or prevent you from withdrawing funds. It may even limit the number of deposits you can make and checks you can write. In some cases, an account holder can place restrictions on his own account.
A restricted bank account can affect your ability to withdraw money as you'd like. An account holder, bank, government agency or probate process can all set restrictions on a bank account.
Bank Placed Restrictions
If your account has been overdrawn due to insufficient funds, the bank likely will restrict your account. You can deposit funds but not withdraw them. Any checks written or pending purchases against the account may be declined. When your account is no longer in the negative, it is restored to good standing, and the restrictions are lifted.
Banks may limit account activity even without overspending. Some banks only allow a certain number of withdrawals or transfers from a savings account. The amount varies depending on the bank, but it is generally between three and six per month.
Customer Placed Restrictions
Customers can choose to place restrictions on a bank account. You may want to do this if you are setting up a trust account for a minor. Funds in the account may be withdrawn to cover health, education and maintenance expenses for the minor until she becomes an adult or reaches the age of 21. A 529 account is a restricted account that is established solely to pay for a minor's college education.
Estate and Probate Restrictions
An estate account is often created to collect and temporarily hold a deceased individual's assets. While some assets are able to transfer directly to beneficiaries, others are required to go through the state's probate process. There are restrictions placed on assets in an estate account.
The funds in the estate are used to pay any outstanding debt, such as taxes, medical bills and funeral expenses. Remaining funds are distributed to beneficiaries according to the will or the state's laws.
Government Agency Restrictions
Government agencies can place restrictions on a bank account. If you fail to pay your taxes, the Internal Revenue Service has the ability to seize assets, including your bank account. If your bank account is levied, the funds are frozen. You can still make deposits, but you are unable to withdraw funds.
After 21 days, funds are sent to the IRS. Under certain circumstances, the IRS may lift the levy if you endure a financial hardship, such as receiving a utility disconnection notice.
The state department of revenue also has the authority to seize and restrict bank accounts for unpaid child support.