Unloading Your Investments: A Step-by-Step Guide to Selling Mutual Funds on Merrill Edge
Have you been considering liquidating some of your mutual fund holdings on Merrill Edge? Whether you're rebalancing your portfolio, needing access to cash, or simply taking profits, the process of selling mutual funds can seem a bit daunting at first. But don't worry, we're here to walk you through it! This comprehensive guide will break down every step, ensuring a smooth and confident experience.
Step 1: Engage with Your Investment Strategy – Why Are You Selling?
Before you even log into your Merrill Edge account, the first and most crucial step is to clearly define why you are selling your mutual funds. This isn't just about clicking a button; it's about aligning your actions with your overarching financial goals.
Are you cashing out for a specific large purchase, like a down payment on a house or a child's education?
Are you rebalancing your portfolio to adjust your asset allocation and risk exposure?
Have you reached a specific profit target and are looking to lock in gains?
Are you divesting from a fund that's underperforming or no longer fits your investment philosophy?
Are you looking to harvest losses for tax purposes?
Understanding your motivation will influence several aspects of the selling process, including the amount you sell, the timing, and how you handle the proceeds. It can also help you anticipate potential tax implications, which we'll touch upon later. Take a moment to reflect on your financial objectives before proceeding.
Step 2: Accessing Your Merrill Edge Account
This is where the practical steps begin! You'll need to log in to your Merrill Edge account.
Online Access:
Navigate to the official Merrill Edge website (
www.merrilledge.com Locate the "Log In" button, usually prominently displayed in the top right corner of the page.
Enter your User ID and Password. If you've forgotten them, utilize the "Forgot User ID" or "Forgot Password" links to regain access. It's essential to keep your login credentials secure.
Mobile App Access:
If you prefer using your mobile device, download and open the official Merrill Edge mobile app from your device's app store (available for iOS and Android).
Enter your User ID and Password. Many apps offer biometric login (fingerprint or face ID) for convenience and enhanced security, so consider enabling this if you haven't already.
Step 3: Navigating to Your Holdings and Selecting the Mutual Fund
Once logged in, you'll need to find your mutual fund holdings.
Locating Your Portfolio:
On the Merrill Edge platform, look for a section typically labeled "Accounts," "Portfolio," or "Holdings." This will display a summary of all your investments.
Click on the specific account (e.g., your brokerage account, IRA, etc.) where your mutual fund is held.
Identifying the Mutual Fund to Sell:
Within your selected account, you'll see a list of all your investments. Scroll or use the search function to locate the specific mutual fund you wish to sell.
Once you've found it, you'll typically see options next to it, such as "Trade," "Sell," or "Manage." Click on the appropriate option to initiate a sell order.
Step 4: Initiating the Sell Order
This is where you specify the details of your sale.
Choosing the Action:
Confirm that you've selected "Sell" (or "Redeem" for mutual funds) as your desired action.
Mutual funds trade differently than stocks or ETFs. Unlike stocks that trade throughout the day, mutual funds are priced once per day after the market closes, based on their Net Asset Value (NAV). This means your sell order will execute at the next calculated NAV.
Specifying the Quantity:
You'll have the option to sell either a specific number of shares or a specific dollar amount.
Sell by Shares: If you know exactly how many shares you want to sell, enter that number.
Sell by Dollar Amount: If you want to withdraw a specific cash value, Merrill Edge will calculate the corresponding number of shares to sell. This can be helpful if you need a precise amount of money.
If you wish to sell your entire holding in that mutual fund, there's usually an option like "Sell All" or "Liquidate Full Position."
Selecting Cost Basis Method (Crucial for Taxes!):
This is a very important step with significant tax implications. When you sell an investment, you realize a capital gain or loss, which is the difference between the selling price and your "cost basis." Merrill Edge allows you to choose how your cost basis is calculated for the shares you're selling. Common methods include:
First-In, First-Out (FIFO): This is the default method if you don't specify. It assumes the first shares you bought are the first ones you sell.
Specific Identification (SpecID): This allows you to choose exactly which shares you want to sell. This is often the most advantageous for tax planning, as you can select shares with a higher cost basis to minimize capital gains or lower cost basis to maximize capital losses.
Average Cost: This method averages the cost of all your shares and is generally only available for mutual funds.
Consult a tax advisor if you are unsure which method is best for your situation. Choosing the wrong method can result in a higher tax bill. Merrill Edge will typically display your available cost basis lots, allowing you to make an informed choice if you select Specific Identification.
Step 5: Reviewing Your Order
Before submitting, always, always, always review your order details carefully.
Double-Check Everything:
Confirm the correct mutual fund is selected.
Verify the quantity or dollar amount you intend to sell.
Ensure the correct cost basis method is chosen.
Review any estimated transaction fees or short-term redemption fees (see FAQs for more on this).
Check the estimated proceeds.
Confirming the Trade:
Merrill Edge will likely prompt you to confirm your order. Read through all the disclosures and terms before finalizing.
Once you confirm, your sell order will be placed. Remember, for mutual funds, the trade will typically execute at the next end-of-day NAV.
Step 6: Monitoring Your Order and Settlement
After placing your order, you'll want to monitor its status.
Order Status:
You can typically find your order status in a "Pending Orders," "Order History," or "Activity" section of your Merrill Edge account.
It will show as "Pending" until the mutual fund's NAV is calculated and the trade executes.
Settlement Period:
Once the trade executes, the funds from the sale are not immediately available. Mutual fund trades typically have a T+2 or T+3 settlement period. This means the cash will be available in your account two or three business days after the trade execution date.
Merrill Edge will clearly indicate when the funds are settled and available for withdrawal or reinvestment.
Step 7: Managing the Proceeds
Once the sale has settled and the cash is in your account, you have several options for managing the proceeds.
Reinvesting:
You can use the cash to purchase other investments on Merrill Edge, such as stocks, ETFs, or different mutual funds, to rebalance your portfolio or pursue new opportunities.
Withdrawing Funds:
If you're withdrawing cash, you'll typically have options like:
Electronic Funds Transfer (ACH): Transfer funds directly to a linked bank account. This is usually free but can take a few business days.
Wire Transfer: For faster access to funds, you can initiate a wire transfer. Be aware that wire transfers usually incur a fee.
Check Request: You can request a physical check to be mailed to your address of record. This is the slowest option.
Ensure your bank account is properly linked to your Merrill Edge account before attempting an ACH transfer. If not, you may need to go through a verification process.
Step 8: Tax Implications (Don't Forget!)
Selling mutual funds, especially those held in taxable brokerage accounts, will have tax implications.
Capital Gains/Losses:
You will either realize a capital gain (if you sold for more than your cost basis) or a capital loss (if you sold for less).
These gains or losses are reported to the IRS on Form 1099-B, which Merrill Edge will provide to you.
Short-term capital gains (investments held for one year or less) are taxed at your ordinary income tax rate, which can be higher.
Long-term capital gains (investments held for more than one year) are generally taxed at more favorable rates.
Keep thorough records of your purchases and sales.
Consult a qualified tax professional to understand how the sale impacts your individual tax situation and to explore strategies like tax-loss harvesting.
Frequently Asked Questions (FAQs)
Here are 10 common questions about selling mutual funds on Merrill Edge, with quick answers:
How to determine the best time to sell mutual funds on Merrill Edge?
The best time depends on your individual financial goals, market conditions, and tax considerations. There's no one-size-fits-all answer. Consider your original investment thesis, performance, and future needs.
How to avoid short-term redemption fees when selling mutual funds?
Many mutual funds impose a short-term redemption fee (often 0.50% - 2.00%) if you sell shares within a certain period, typically 30, 60, or 90 days, to discourage frequent trading. Check the fund's prospectus for specific details on redemption fees and holding periods.
How to check my mutual fund's cost basis on Merrill Edge?
Log in to your Merrill Edge account, navigate to your holdings, and select the specific mutual fund. There should be a section or link to view "Cost Basis" or "Tax Lot Details," which will show you the acquisition date and price of your shares.
How to transfer the proceeds of a mutual fund sale to my Bank of America checking account?
If your Merrill Edge account is linked to your Bank of America checking account, you can typically initiate an electronic funds transfer (ACH) from your Merrill Edge account's "Transfer Funds" or "Move Money" section.
How to sell a mutual fund held in an IRA on Merrill Edge?
The process for selling mutual funds in an IRA is largely the same as in a taxable account. However, withdrawals from an IRA may have different tax implications (e.g., ordinary income tax and potential penalties for early withdrawal if under 59 1/2). The proceeds will remain within the IRA unless you explicitly initiate a distribution.
How to find out if my mutual fund has a sales load (front-end or back-end) on Merrill Edge?
You can find information about sales loads (commissions) in the mutual fund's prospectus, which is usually accessible through the fund's detail page on Merrill Edge, or by contacting Merrill Edge customer service.
How to cancel a pending mutual fund sell order on Merrill Edge?
If your sell order for a mutual fund has not yet executed (i.e., it's still "pending" before the daily NAV calculation), you may be able to cancel it through your "Order History" or "Pending Orders" section on the Merrill Edge platform. Once executed, it cannot be canceled.
How to contact Merrill Edge customer service for assistance with selling mutual funds?
You can contact Merrill Edge customer service by phone at 1-888-637-3343 for Self-Directed accounts, or 1-888-654-6837 for Advisory Center clients. They are available to assist with any questions or issues.
How to understand the tax implications of selling mutual funds for capital gains or losses?
When you sell a mutual fund for a gain, it's a capital gain (taxable). If you sell for a loss, it's a capital loss (can offset gains and potentially a limited amount of ordinary income). The holding period (short-term vs. long-term) significantly impacts the tax rate. Always consult a tax advisor.
How to determine if a mutual fund is a good candidate for tax-loss harvesting on Merrill Edge?
Tax-loss harvesting involves selling investments at a loss to offset capital gains and reduce your taxable income. Look for mutual funds in your portfolio that have declined in value since you purchased them. Ensure you comply with wash sale rules if you plan to repurchase a similar fund.