Can You Sell Stock Anytime You Want?
Stocks are generally considered to be liquid investments, meaning that they trade freely on the open market. That means you can sell the shares you own any time you wish. But even so, there are some restrictions you need to be aware of, especially if you buy stock through an employer stock purchase plan.
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Personal Accounts
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If you hold stock in a personal account, you can sell that stock whenever you wish. All you need to do is call your broker or log on to your account if you have online access. Just let the broker know which stock you want to sell and how many shares or enter that information into the sell order form on the website. You can set a limit order, which is executed only if your stock reaches a certain price, or a market order, which is executed at the best available price at the time you enter the sale order. Once the order goes through, you will receive a confirmation, and you should keep that document with your tax records.
Retirement Accounts
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If you hold stock in a tax-deferred account like an IRA, you can sell that stock any time you wish. One advantage of holding stock within a tax-deferred account is that you can sell the stock without paying capital gains taxes. But although you can sell the stock held in a tax-deferred account, you cannot take the money and use it personally. You must invest it elsewhere within the confines of the tax-deferred account. If you actually withdraw the money, you face a tax penalty unless you are at least 59 1/2 years of age.
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Employee Stock Purchase Plans
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Many employers allow their employees to purchase shares of company stock directly through payroll deduction. These employee stock purchase plans often allow workers to buy stock at a discount from market price, and they generally do not charge brokerage fees when the stock is purchased. The employer may place restrictions on when employees can sell their stock by setting trading windows. Employees are allowed to sell the stock they purchased only when the trading window is open. Sometimes this restriction applies only to officers and managers within the organization, but other plans place this restriction on all participating employees.
Tax Considerations
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While you can typically sell your stock whenever you want, it is important to consider the tax implications before you do. If you have held your stock for a year or less,you are subject to the short-term capital gains tax, which is the same as your ordinary income tax rate and could be as high as 35 percent as of publication. If you can hold the stock for at least a year and a day, that capital gains tax rate drops to a maximum of 15 percent.
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References
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