Can I take out deposits made to a brokerage account without tax consequences?

by Larry M. Carroll, CPA | Aug 04, 2017

If I make multiple deposits into a brokerage account, can I pull out all the money I deposited tax-free, or only the initial deposit to open the account? My question is based on the first-in, first-out (FIFO) method. For example, I open a brokerage account with $70,000 in 2015 and the account grows to $100,000, I then deposit another $15,000 in 2016 and the account grows to $150,000. Can I pull the whole $85,000 out tax-free, or can I only pull the initial $70,000 before I must start paying taxes?

The type of account is important to answer the question properly. If this is a personal account, you should be paying tax on realized gains in the year the transaction occurs. If this is a retirement account, the rules are quite different.

I recommend that you speak with a professional in person on this matter, and be sure to indicate the kind of account that is in question.

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Answered by: Larry M. Carroll, CPA, is an individual practitioner with Larry M. Carroll CPA PC in Blue Bell, Pa.
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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