Yes, you can withdraw money from stocks, but not in one step. Shares are ownership stakes, not a cash balance, so you first sell them on an exchange, wait one business day for the trade to settle, and then transfer the proceeds to your bank. The whole path from sell order to spendable cash typically runs two to four business days, and the sale itself is a taxable event the IRS expects you to report.
Step One: Sell the Shares
The dollar figure next to a ticker in your brokerage app is what a buyer would pay right now, and that number moves constantly during trading hours. To turn shares into dollars, you place a sell order. The major U.S. exchanges run their core session from 9:30 a.m. to 4:00 p.m. Eastern Time, Monday through Friday, and most retail orders execute inside that window.1NYSE. Holidays and Trading Hours
You have two basic order types. A market order sells immediately at the going price. A limit order sells only if the stock hits a price you set, giving you control but no guarantee it fills. Once your order fills, the sale price minus any commissions becomes your gross proceeds, and the settlement clock starts.
Step Two: Wait for Settlement
Selling does not instantly produce withdrawable cash. Under SEC Rule 15c6-1, most stock trades settle on a T+1 basis, meaning the transaction finalizes one business day after the trade date.2SEC. Shortening the Securities Transaction Settlement Cycle Sell on Tuesday, settlement completes Wednesday. Sell on Friday, and settlement rolls to Monday because weekends and market holidays do not count as business days.
During that window, the clearinghouse confirms the trade and moves the shares and cash to the correct accounts. Until settlement finishes, your proceeds appear as “unsettled funds” in most platforms. You can often use unsettled funds to buy other securities in a margin account, but you cannot send them to your bank.
A Trap for Cash Accounts
If your account is a cash account rather than a margin account, spending unsettled funds carelessly can trigger a good faith violation. That happens when you buy a security with unsettled proceeds and then sell that new security before the original sale has settled. A single violation within a 12-month period can restrict your account to trading with only fully settled cash for 90 days. Most investors never encounter this, but it catches people off guard after a large sale when they try to redeploy the money immediately.
Step Three: Move the Cash to Your Bank
Once your trade has settled, you go to the transfer section of your brokerage platform and send the money to a linked bank account. Two options are standard:
- ACH transfer. Free at most brokerages, but arrives in one to three business days. Many platforms cap daily ACH transfers anywhere from a few thousand dollars to $25,000 or more, depending on the firm and your account history.
- Wire transfer. Same-day or next-day, but brokerages commonly charge $20 to $50 per outgoing wire. Wires make sense when the amount is large and the fee is trivial next to it.
If you are moving a very large sum, daily ACH limits can force you to split the transfer across several days or pay for a wire. Some brokerages will raise your ACH cap on request, especially for accounts with substantial balances. Call before assuming you are stuck with the default.
Taxes on the Sale
Any sale where your proceeds exceed what you paid produces a capital gain, and the rate depends on how long you held the shares.
- Short-term gains, on shares held one year or less, are taxed at your ordinary income tax rate, which runs from 10% to 37% depending on your total taxable income.3Internal Revenue Service. Topic No. 409, Capital Gains and Losses
- Long-term gains, on shares held more than one year, qualify for preferential rates of 0%, 15%, or 20%, based on filing status and taxable income. Most people land at 15%.3Internal Revenue Service. Topic No. 409, Capital Gains and Losses
The difference between the two categories is large enough that holding a stock one extra day past the one-year mark can meaningfully cut your tax bill. Your brokerage reports every sale to the IRS on Form 1099-B, including the buy date, sell date, cost basis, and proceeds.4Internal Revenue Service. Instructions for Form 1099-B (2026) The IRS knows about the sale before you file, so accuracy on your return matters.
The Extra 3.8% for Higher Earners
Higher earners owe an additional 3.8% net investment income tax on capital gains once modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly.5Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax The tax applies to the lesser of your net investment income or the amount by which your income exceeds the threshold. Those dollar thresholds are written into the statute and are not indexed for inflation, so more people cross the line each year. Combined with the top long-term rate, the effective federal rate on gains can reach 23.8%.
Selling at a Loss
Not every sale produces a gain. When you sell for less than you paid, the loss offsets other capital gains dollar for dollar. If losses exceed gains for the year, you can deduct up to $3,000 of the excess against ordinary income, or $1,500 if married filing separately.6Office of the Law Revision Counsel. 26 USC 1211 – Limitation on Capital Losses Anything beyond that carries forward to future years indefinitely.
The wash sale rule limits how you harvest losses. If you sell a stock at a loss and buy the same or a substantially identical security within 30 days before or after the sale, the loss is disallowed for tax purposes.7Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities The disallowed loss gets added to the cost basis of the replacement shares, so the benefit is delayed rather than lost. The window runs in both directions, creating a 61-day restricted period around the sale.
Which Shares You Sell Matters
If you bought the same stock at different times and prices, the specific shares you sell affect your tax bill. Most brokerages default to first-in, first-out, selling your oldest shares first. Because prices tend to rise over time, FIFO usually produces the largest gain and the highest tax. The alternative is specific identification, where you pick the exact lot to sell. You generally have to select the lots at the time you place the order, so make the choice before you hit sell.
Estimated Payments After a Large Sale
Salary income has taxes withheld automatically; capital gains usually do not. If you sell a large position, the IRS expects payment during the year the gain occurs, not the following April. You generally need to make estimated quarterly payments if you expect to owe $1,000 or more after subtracting withholding and credits.8Internal Revenue Service. Estimated Taxes
The 2026 quarterly due dates are April 15, June 15, September 15, and January 15, 2027. You can avoid an underpayment penalty by paying at least 90% of your current year tax liability or 100% of last year’s tax, whichever is less. If your adjusted gross income exceeded $150,000 in the prior year, that 100% figure rises to 110%.9Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty This is where people most often get caught: they sell $200,000 of stock in June, spend the proceeds, and face a five-figure bill plus penalties the following spring.
Retirement Accounts Follow Different Rules
Everything above applies to stocks held in a regular taxable brokerage account. Shares held inside a traditional IRA, 401(k), or Roth account come with a separate rulebook layered on top: a 10% additional tax on most withdrawals before age 59½, required minimum distributions starting at age 73 for traditional accounts, a 60-day deadline on rollovers, and different rules for Roth contributions and earnings.10Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts11Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions If your shares sit in one of those accounts, plan the withdrawal against those rules before selling.
Borrowing Against Your Portfolio Instead
Some investors avoid the sell-and-withdraw process entirely by taking a margin loan against their portfolio. This provides cash without triggering a taxable event, which appeals to holders sitting on large unrealized gains. Margin loans are not free, though. Interest accrues daily, compounds monthly, and rates move without notice.
The bigger risk is forced selling. FINRA requires at least 25% maintenance equity in a margin account at all times, and most brokerages set their own threshold higher, typically 30% to 40%.12SEC. Understanding Margin Accounts If a market decline pushes your equity below that level, the brokerage issues a margin call demanding cash or additional securities. If you cannot meet the call, the brokerage can sell your holdings without consulting you, at whatever price the market offers. Margin can work for short-term liquidity, but as a substitute for withdrawing it invites the kind of forced sale that damages long-term returns.