How to Take Money Out of Mutual Funds

As of the fourth quarter of 2018, the Investment Company Institute estimates that worldwide mutual fund assets totaled $46.70 trillion. A sliver of that cash might be yours. Although you can sit back and watch it grow, you have the right to withdraw some of your mutual fund money whenever you want to.

The first step in withdrawing money from your mutual fund is to contact the firm you opened your account with or transferred it to. You may have purchased mutual fund shares directly from a mutual fund company. However, investors are increasingly buying mutual fund shares through banks, brokerages and other types of financial institutions that offer investment products and trading privileges. You can find your firm's contact information on the monthly or quarterly statement it sends you via snail mail or email. If you have online account access, simply enter your log-in name and password to view your portfolio.

Tell the firm that you would like to sell some shares of the mutual fund you wish to take money out of. If you own the fund directly through the mutual fund company, you should be able to execute this trade over the phone via an automated telephone system, if you signed up for that option, or through the mail or online. Options vary by company. If you own the fund through a brokerage account, for example, you can call or go online to execute the trade just as you would with an individual stock.

Instruct the company as to what you would like to do with the proceeds. You can keep the proceeds as cash in a brokerage account, which gives you the option of reinvesting the money. You can also receive the proceeds by check or electronic bank transfer.

Mutual funds may charge a redemption fee when you redeem shares. Some charge the fee regardless of when you sell. Other funds limit the redemption fee period to 90 days from the date you purchased the shares. Not all mutual funds charge a redemption fee. The SEC limits this fee to 2 percent.

You may sell mutual funds shares that you own within an IRA. Simply selling shares and leaving them in your IRA as cash or putting the proceeds into a different investment doesn't trigger tax consequences. However, if you sell mutual fund shares and then take a distribution from your IRA, you might be subject to tax on the withdrawal. Consult your tax or financial adviser or IRS Publication 590 on IRAs for details specific to your situation.