How to Withdraw Money From a Brokerage Account | The Motley Fool (2024)

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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. Unlike with a bank account, taking money out of this type of investment account can sometimes involve extra steps. The main reason is that your money is presumably invested and not available as cash.

Fortunately, 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 brokerage account, here's how:

  1. Log in to your account on your broker's site.
  2. Go to the transfers page. Where you find this option depends on the broker you use, but it's usually on the main navigation bar.
  3. Choose the amount and the withdrawal method. You can transfer the money to a bank account, wire it, or request a physical check. Most brokers, even the best online brokers that don't have many fees, do charge fees for wire transfers. This type of transfer is faster than a standard electronic funds transfer.

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.

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. After your trade has settled, you can follow the withdrawal process above to get your cash.

One final thing to note is that 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. Always check with your broker before doing an automated withdrawal to ensure you won't get hit with interest charges or other fees by jumping the gun.

RELATED: What Taxes Do I Pay on Selling Stock?

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Withdrawing money from retirement accounts

If you've opened 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.

What's more, those who are younger than 59½ often have to pay early withdrawal penalties, which is why it's not recommended to tap into your retirement savings. The federal government charges early withdrawal penalties equal to 10% of the withdrawal. Your state may also charge a 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:

  • Purchasing your first home
  • Paying for educational expenses
  • Paying for medical expenses
  • Supporting yourself because of a disability

The way taxes and penalties are handled depend 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 filing your tax return.

LEARN MORE: Are Brokerage Accounts Taxable?

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 get a hold of 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.

Our Brokerages Experts

How to Withdraw Money From a Brokerage Account | The Motley Fool (79)

By:Lyle Daly

Writer

Lyle Daly is a personal finance writer who specializes in credit cards, travel rewards programs, and banking. He writes for The Ascent and The Motley Fool, and his work has appeared in USA Today and Yahoo! Finance. He was born in California but currently lives as a digital nomad with a home base in Colombia.

How to Withdraw Money From a Brokerage Account | The Motley Fool (80)

How to Withdraw Money From a Brokerage Account | The Motley Fool (81)Fact CheckedEric McWhinnie

Eric McWhinnie has been writing and editing digital content since 2010. He specializes in personal finance and investing. He also holds a bachelor’s degree in Finance.

How to Withdraw Money From a Brokerage Account  | The Motley Fool (2024)

FAQs

How do I withdraw money from my brokerage account? ›

Can you pull money out of a brokerage account? 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.

How do I withdraw money from my Fidelity brokerage account? ›

What Are the Steps to Withdraw Money from a Fidelity Brokerage Account?
  1. Step 1: Log in to Your Fidelity Account. ...
  2. Step 2: Navigate to the Withdraw Funds Page. ...
  3. Step 3: Choose the Account and Amount to Withdraw. ...
  4. Step 4: Confirm the Transaction.

How do I withdraw money from my trading account? ›

To initiate a withdrawal from your trading account, ensure an ample free balance, and proceed by placing a withdrawal request through your trading platform or by contacting your broker's customer care. Provide the necessary details, including the withdrawal amount and bank information.

How do I withdraw money from my Schwab brokerage account? ›

Withdrawing money from Charles Schwab - a step-by-step guide

Log in to your account. Go to 'Transfers & Payments'. Select the withdrawal method. Select your Charles Schwab account as 'Transfer from'.

How long does it take to withdraw money from a brokerage account? ›

Proceeds from trades are available for withdrawal upon settlement of the trade (typically 1-3 business days, depending upon the type of security). There is a seven (7) business day hold on checks and bank transfer deposits. Cash from wires are available for withdrawal the following business day.

Why can't I withdraw money from my investment account? ›

Following a sale in your investing or retirement account for equities or options, the transaction usually needs to settle before you can withdraw the proceeds to your bank account. The settlement period for equities is the trade date plus 2 trading days (T+2), sometimes referred to as regular-way settlement.

How long does it take to withdraw money from Fidelity brokerage account? ›

Withdrawals by check generally require 5 to 7 business days, Electronic Funds Transfer (EFT) or Fidelity Electronic Funds Transfer generally require 1 to 3 business days, and withdrawals that are directed to a Fidelity non-retirement account generally require 1 to 2 business days for processing.

Can you take money out of a brokerage account without paying taxes? ›

How Are Brokerage Accounts Taxed? When you earn money in a taxable brokerage account, you must pay taxes on that money in the year it's received, not when you withdraw it from the account. These earnings can come from realized capital gains, dividends or interest.

Can I withdraw cash from my Fidelity account? ›

If you have cash in your Fidelity account, you can withdraw the money online to a personal bank account. 2. Click on 'Log in' at the top right corner of the page before following the log in process.

Can I transfer money from trading account to bank account? ›

Funds cannot be transferred from your Demat account to your bank account directly. All transfers to your bank account can be made using the trading account, which acts as an interface between your Demat account and bank. 2. Remember that only the amount earned upon the sale of securities can be encashed.

Is brokerage cash my money? ›

Brokerage cash is a top-line cash total in your investing account. It's the cash amount before stripping out items like unsettled trades and collateral. Buying power is the bottom-line amount of cash available to you immediately. It might be called "cash available for withdrawal" or some variant on that.

When should I withdraw from my trading account? ›

Withdrawals should align with your financial objectives. If you've reached a particular savings goal or need funds for a specific purpose, such as purchasing a home, covering educational expenses, or fulfilling other financial obligations, it might be an appropriate time to withdraw funds from your trading account.

Why can't i withdraw money from Charles Schwab? ›

Only settled funds may be withdrawn

After signing in, navigate to My Money>Withdrawals, or for a shortcut click here. If you just closed a trade and see a $0.00 Available to Withdraw, then chances are your position has not settled yet. Depending on what you are trading, settlement times can vary.

What is the penalty for withdrawing from Charles Schwab? ›

Once you reach age 59½, you can begin withdrawing funds from your traditional IRA without any restrictions or penalties. Taking money out before then can result in a 10% penalty from the federal government, and a state penalty may also apply.

Do brokerage accounts have routing numbers? ›

Almost all financial institutions use routing numbers — even brokerages. The routing number has a couple of names, including the ABA number or routing transit number.

Does it cost money to take money out of brokerage account? ›

You can take money out of your account at any time without paying fees or penalties. When it comes to saving for retirement, there are some major differences between brokerage accounts and tax-advantaged retirement accounts like a 401(k) and Roth IRA. The main difference (and it's a big one) is how they are taxed.

Are you taxed when you withdraw from brokerage account? ›

Taxable Accounts

They offer fewer restrictions and more flexibility than tax-advantaged accounts such as individual retirement accounts (IRAs) and 401(k)s. Unlike an IRA or a 401(k), you can withdraw your money at any time, for any reason, with no tax or penalty from a brokerage account.

Can you use a brokerage account as a checking account? ›

Like the best checking accounts, a brokerage checking account provides checks, a debit card and ATM access. Depending on the brokerage, you may also qualify for ATM fee reimbursem*nts or interest on your balance. Some brokerages may even waive foreign transaction fees if you travel internationally.

Do brokerage accounts have withdrawal fees? ›

A brokerage account is an investment account from which you can purchase investments such as stocks, bonds and mutual funds. You can add money to a brokerage account similar to the way you deposit funds into a bank account. Brokerage accounts have no contribution limits or early withdrawal penalties.

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