When you make a deposit into your bank account, the bank tellers normally check your deposit to ensure that no errors have been made. However, when you make a deposit at an automated teller machine (ATM) or into a night drop vault, it could take 24 hours or more for anyone to notice your errors. Bank employees sometimes make errors when handling deposits, and as with customer errors, employee errors can end up costing you time and money.
Banks can charge fees for deposits that take a long time to process. If a teller counts a cash deposit and finds that the cash in the deposit does not match the amount listed on the deposit slip, the teller must have a second teller verify the money. If the second teller also comes to the same conclusion, then the tellers must correct the deposit slip and can charge you a fee because your deposit took longer than normal to process.
Sometimes tellers make errors when processing deposits, and this can lead to the incorrect amount being credited to your account. Such errors are normally caught and corrected within a few days by the bank's proof department employees who are tasked with checking the teller's work. If a teller error results in excess funds being credited to your account, you have no legal right to use those funds. Your bank can debit the money from your account, and you are responsible for paying any overdraft fees that are caused as a result of the money being taken from the account. If your bank credits too little to your account, the bank must correct the error and the bank must absorb the cost of any charges that the error caused.
Federal tax laws limit the amount of money that you can deposit each year into your individual retirement arrangements. Once you reach the age of 70 1/2, you must begin to make withdrawals from your IRAs, and the minimum withdrawal amounts are based upon your account balances. You incur tax penalties if you deposit too much into an IRA or if you fail to make the required minimum withdrawal. Therefore, if you or your bank make a deposit error when you start or rollover an IRA, it could result in tax complications and penalties further down the line.
State laws related to bank deposit corrections vary, but typically, banks have the right to make corrections to deposits several years after those deposits actually occurred. Many account holders feel that such laws are unfair to customers and that the bank employees have little incentive to avoid mistakes. In reality, tellers receive performance assessments that are largely based around deposit processing. Tellers who frequently make mistakes stand to lose their jobs. Additionally, teller managers and branch managers often lose bonuses when teller's make mistakes, so inaccurate deposits prove costly for everyone.