How to Close a Nonprofit Bank Account: Board Resolution and Filings

To close a nonprofit bank account, the board first passes a resolution authorizing the closure and naming who will handle it, the organization clears every pending transaction, and the remaining balance is transferred out — to a new bank if the nonprofit is switching institutions, or to another tax-exempt organization or a government body if the nonprofit is dissolving. The bank then issues a final statement and a closure confirmation letter, which go into the organization’s permanent records along with proof of where the money went.

Start With a Board Resolution

A nonprofit’s bylaws typically specify which officers can manage bank accounts and what vote is required to change them. Before anyone contacts the bank, the board should meet and pass a formal resolution authorizing the closure. The resolution needs to name the specific individuals empowered to carry out the transaction and state the reason for closing — a switch to a new institution or a full dissolution.

Meeting minutes should record the vote count, the date, and the text of the resolution. That paper trail proves the decision was made through proper governance rather than by a single officer acting alone. Banks routinely ask for a signed copy of the resolution before they will process the closure, so have it ready before scheduling the bank visit.

Clear Pending Transactions and Confirm the Final Balance

Every outstanding check needs to clear, and any recurring electronic activity — direct debits, automatic bill pay, payroll transfers — has to be canceled well in advance. Giving payees time to update their records prevents returned transactions and the fees or vendor headaches that follow.

Ask the bank for a payoff figure that reflects any remaining monthly maintenance fees, transaction charges, minimum-balance penalties, and pending interest credits. That number is what you actually have to move.

If the Nonprofit Has Employees and Is Dissolving

Process the final payroll before the account closes. File a final Form 941 by checking the box on line 17 and entering the last date wages were paid, and attach a statement listing the name and address of the person who will keep the payroll records going forward.¹ Employment tax records must be kept for at least four years after the final quarter’s return is filed.²

Where the Remaining Money Can Go

If the nonprofit is simply switching banks, the balance moves to the new account and the rules below don’t restrict you. If the nonprofit is dissolving, federal law tightly controls the destination of what’s left.

No part of a 501(c)(3)’s net earnings may benefit any private individual, a rule known as the prohibition on private inurement.³ On dissolution, the organization’s assets must be dedicated to an exempt purpose: they must go to another tax-exempt organization, to the federal government, or to a state or local government for a public purpose. If the articles of incorporation or state law would instead send the money to members or shareholders, the organization fails the organizational test for exemption.⁴

Violating these rules can cost the organization its tax-exempt status. Individuals who receive an excess benefit face an excise tax of 25 percent of that benefit, any organization manager who knowingly approved the transaction faces a separate 10 percent tax, and if the excess benefit is not corrected in time the recipient owes an additional tax of 200 percent.⁵

Restricted and Endowment Funds

Gifts that came in with strings attached — money earmarked for scholarships, a specific program, or a particular purpose — carry those restrictions with them. The receiving organization has to honor the same terms the original donor set. When honoring the exact terms has become impossible or impractical, a court may apply the cy pres doctrine to redirect the funds to the closest available purpose, and in many states a living donor must consent before the restriction can be modified. Because the rules vary by state, get legal advice before moving restricted funds.

One boundary worth naming: leaving the account to sit idle is not a substitute for closing it. State escheatment laws generally require banks to turn dormant balances over to the state after three to five years of no customer activity.⁶ Formal closure keeps the board in control of where the money lands.

What to Bring to the Bank

Banks verify both the organization’s legal existence and the authority of the people making the request. Gather these before contacting the bank:

A signed and dated board resolution authorizing the closure and naming who is empowered to act
The articles of incorporation, showing the nonprofit is a legally formed entity
The organization’s Employer Identification Number (EIN), which the bank will match against its records
Government-issued photo ID for each authorized signer — a driver’s license, passport, or equivalent⁷
The bank’s own account closure form, which asks for the account number, the reason for closing, and instructions for disbursing the final balance

Some banks require notarization; notary fees are typically modest, often under $25 per signature depending on the state, but arranging it ahead of time avoids delay. If the original authorized signers are no longer available because of death or incapacity, expect the bank to ask for additional documentation such as court-issued letters of administration, a death certificate, or evidence of a successor’s authority under the governing documents.

Closing the Account and Getting Proof

The authorized signer meets with the bank, either at a branch or through a secure business-banking portal, and signs the final closing documents. The bank disburses the remaining balance, typically by cashier’s check or by wire transfer to the designated new account. Business wire transfers generally run between $25 and $35, depending on the bank and whether the transfer is domestic or international.

The bank should provide a final account statement showing a zero balance and a formal letter confirming the account is closed. Keep both. They are the proof that the banking relationship has ended and the funds have been accounted for.

Federal and State Filings if You’re Dissolving

Closing the account is one piece of a dissolution, not the whole thing. The organization has to file a final Form 990 (or Form 990-EZ or 990-PF, depending on its size) by the 15th day of the fifth month after the dissolution.⁸ A calendar-year organization that dissolves in 2026 would face a May 15, 2027 deadline.

On that final return, check the “Final return/terminated” box in the header and complete Schedule N, which reports the liquidation and disposition of assets — descriptions, fair market values, distribution dates, recipient information, and any transaction fees. Schedule N also asks whether any officer, director, or key employee has a role or financial interest in a recipient organization. Attach a certified copy of the articles of dissolution and any plan of liquidation. Organizations that were not required to file annual returns but that received a determination letter should send termination documentation directly to the IRS TEGE Correspondence Unit.⁹

Federal filings do not finish the job at the state level. The IRS itself advises organizations to check with their state attorney general or other appropriate state office about dissolution procedures.⁹ Most states require two things:

Articles of dissolution (sometimes called a certificate of dissolution) filed with the Secretary of State. Fees and processing times vary by state.
Notice to the attorney general before assets are distributed, particularly when the organization is transferring or disposing of a majority of its property. Some states impose a mandatory review period, often 30 days, before the transaction can be finalized.

Skipping the state filings can leave the nonprofit in an ambiguous status that generates ongoing annual-report obligations and fees long after the organization has stopped operating.

Records to Keep After the Account Is Closed

The IRS requires exempt organizations to keep records that support items on their returns for as long as the statute of limitations is open — generally three years from the date the return was due or filed, whichever is later.² Employment tax records stay for at least four years. Some records are kept permanently: the application for tax-exempt status, the IRS determination letter, articles of incorporation, bylaws, and board minutes.

For the closure itself, the permanent file should include:

The final bank statement showing a zero balance
The bank’s closure confirmation letter
Proof of the final fund transfer — the wire receipt, cashier’s check copy, or ACH confirmation
Documentation for each recipient organization, including evidence of its tax-exempt status and written acknowledgment of the transfer

Assign one person to hold these records in a secure location after dissolution. If questions come up years later about how the organization handled its charitable assets, this file is the answer.¹⁰

1
Internal Revenue Service. Instructions for Form 941
2
Internal Revenue Service. Publication 4221-PC Compliance Guide for 501(c)(3) Public Charities
3
Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc.
4
eCFR. 26 CFR 1.501(c)(3)-1 – Organizations Organized and Operated for Religious, Charitable, Scientific, Testing for Public Safety, Literary, or Educational Purposes
5
Office of the Law Revision Counsel. 26 USC 4958 – Taxes on Excess Benefit Transactions
6
HelpWithMyBank.gov. When Is a Deposit Account Considered Abandoned or Unclaimed
7
eCFR. 31 CFR 1020.220 – Customer Identification Program Requirements for Banks
8
Internal Revenue Service. 2025 Instructions for Form 990 Return of Organization Exempt From Income Tax
9
Internal Revenue Service. Termination of an Exempt Organization
10
Internal Revenue Service. EO Operational Requirements – Recordkeeping Requirements for Exempt Organizations