Individual Retirement Accounts are tax-advantaged, long-term savings accounts designed to encourage Americans to save for retirement. Mutual funds are often a good choice of investment for IRA accounts because mutual funds are similarly designed to be long-term investments. However, if you need to sell mutual funds in an IRA for any reason, the procedure is the same as in any other account.
Step 1
Gather your account information. You can't sell what you don't own, so verify that you own the mutual fund you intend to sell. Collect all information about the fund, such as the name of the fund, the number of shares you own and the symbol for the mutual fund. You will also need your own personal information, including your name as listed on the account and the account number, to sell the mutual fund.
Step 2
Verify that all your shares are in the same account. Even if you think you bought all of your shares through a financial services firm, check to see that you do not have any shares in the custody of the mutual fund company itself. Mutual fund stock splits, dividends or inherited shares sometimes end up being housed at a mutual fund company, so if you intend to sell, locate all of your shares first, wherever they may be.
Step 3
Understand the cost of your transaction. Although many mutual funds do not charge any fees for selling shares, sometimes you will have to pay a commission. Class B shares in particular carry "back-end" sales charges, or fees you must pay when you sell fund shares. Confirm the total cost of your transaction with your financial services firm before you enter your order, and determine if the cost outweighs the benefits of your sale.
Step 4
Disregard tax ramifications. Normally, before you sell a mutual fund, you should determine if you will have a capital gain by subtracting your cost of purchase from your estimated sales proceeds. In an IRA, however, your proceeds are not taxable until you take a distribution from the account. Thus, whether you have a gain or a loss should have no bearing on your choice to sell the fund.
Step 5
Sell your shares. Contact your financial adviser or log on to your online brokerage account to sell your shares. Unlike stocks, mutual funds are priced once per day, when the market closes, so you will not know the exact proceeds of your sale until the end of the market day.
Step 6
Read your confirmation. If you sell your mutual fund through a broker, you will receive a written confirmation of your fund sale in the mail, and may possibly receive an electronic confirmation as well. If you entered your own trade using an online broker, you should receive a trade confirmation via email or on the broker website. Confirm that you sold the proper shares of the correct mutual fund.
Member Comments