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How to Withdraw Money From a Brokerage Account

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No matter what you're investing for, there comes a time when you need to withdraw money from a brokerage account. This may be a bit different than what you're used to with a bank account. The main reason is that your money is invested and not immediately available as cash.

It's not too difficult to get the hang of this process. Once you learn how to withdraw money from a brokerage account, you'll be able to access your money when you need it.

How to withdraw money from a brokerage account

When you want to withdraw money from a brokerage account, here's how:

  1. Log in to your account on your broker's site.
  2. Go to the transfers page, which is usually found on the main navigation bar.
  3. Choose the amount and the withdrawal method -- with most online stock brokers, your options are normally a transfer to a bank account, a physical check, or a wire transfer for an additional fee.

You can only withdraw cash from your brokerage account. If you want to withdraw more than you have available as cash, you'll need to sell stocks or other investments first. If you want to move your investments from one account to another, check out our guide on how to transfer a brokerage account.

Keep in mind that after you sell stocks, you must wait for the trade to settle before you can withdraw money from your brokerage account. This typically takes two business days, and after your trade has settled, you can follow the withdrawal process above. You will also owe taxes after selling stock if you've made a profit.

Withdrawals from a margin account

If you have a margin account, your broker might let you take cash out before your trades settle. However, you could be charged margin interest for the period of time between when you submit the request to withdraw money from a brokerage account and when the settled funds reach your account.

When using a margin account, check with your broker before your withdrawal to ensure you won't get hit with interest charges or other fees.

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Withdrawing money from retirement accounts

If you have an individual retirement account (IRA) with your broker and you want to make a withdrawal, there are additional rules you need to know.

Withdrawals from retirement accounts have brokerage taxes that withdrawals from regular brokerage accounts don't. If you take money out of a traditional IRA or 401(k) account, you have to pay income tax on the amount of your withdrawal. You'll add the withdrawal to your taxable income when preparing your tax return, and then you must pay the resulting taxes, which will depend on your tax bracket.

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TIP
A tip for retirees

Consider opening a Roth IRA to save on taxes when you're retired. This type of IRA doesn't allow you to deduct contributions on your income taxes, but it does offer tax-free withdrawals in retirement.

Early withdrawal penalties

Those younger than age 59 1/2 need to pay early withdrawal penalties when taking money from their retirement accounts. That's why tapping into your retirement savings early is not recommended. The federal government charges an early withdrawal penalty of 10%, and your state may charge a tax penalty of its own.

Fortunately, there are some exceptions. It may be possible to avoid a penalty if your withdrawal is for any of the following:

How to pay taxes and penalties

The way taxes and penalties are handled depends on the broker. Some require you to withhold these from the amount you withdraw, which means you'd need to take out more money to end up with the amount you want.

Others let you decide if you want to withhold anything. If not, then you're responsible for paying any applicable taxes and penalties when you file your tax return.

Plan ahead for a smooth withdrawal process

It's not quite as fast or easy to withdraw money from a brokerage account as it is to get money out of your bank account. If you need to make any trades, those will take a couple days to settle. You'll also need to wait for the funds to transfer to your bank account after you make the withdrawal, unless you pay extra to wire the money.

What this means is that it's best to give yourself some time to withdraw money from a brokerage account. You'll be able to take out your money, but it's not a process that you can rush.

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FAQs

  • Yes, you can pull money out of a brokerage account with a bank account transfer, a wire transfer, or by requesting a check. You can only withdraw cash, so if you want to withdraw more than your cash balance, you'll need to sell investments first.

  • It generally takes one to three business days for an ACH transfer to a bank account, less than 24 hours for a wire transfer, and seven to 10 days for a check.