Unlocking Your Money: Withdrawing From Mainstay Investment Fund

MainStay Funds are a series of mutual funds offered by New York Life Investments, a subsidiary of New York Life Insurance Company. The company opened MainStay mutual funds to individual retail investors and financial advisors in 1985.

MainStay Funds provide investors with portfolio management in equities, fixed income, multi-asset, money market, and other investment solutions. The funds are designed to help with long-term growth, income generation, managing volatility, fighting inflation, tax efficiency, and retirement planning.

To withdraw money from your MainStay investment fund, you can contact New York Life Investments, the manager of the funds, or a broker.

MainStay Funds for Retirement

MainStay Funds, now known as NYLI Funds, are a series of mutual funds offered by New York Life Investments, a subsidiary of New York Life Insurance Company. The company opened MainStay mutual funds in 1985 to individual retail investors and financial advisors.

The following four MainStay mutual funds are well-suited for those who want to create a diverse portfolio for retirement savings or for anyone exploring their options:

MainStay Balanced Fund (MBNAX)

This fund seeks to provide a total return through a combination of growth and current income. The fund consists of a mixed portfolio of equity securities and fixed-income securities. As of September 30, 2021, the fund allocated about 63.6% in common stocks and the remainder in fixed-income securities, ETFs, and cash. The fund's top five sectors as of that date were financials, consumer non-cyclical, government, industrials, and communications. The minimum initial investment for this fund is $15,000, and it has annual fund operating expenses of 1.09%.

MainStay Income Builder Fund (MTRAX)

The MainStay Income Builder Fund is a Morningstar four-star-rated fund that aims to provide current income for capital and income growth. MTRAX is comprised of a mixture of stocks, fixed-income assets, cash, and asset-backed securities. The fund's top five sectors as of September 30, 2021, were financials, consumer non-cyclical, mortgage securities, consumer cyclical, and technology. MTRAX has consistently underperformed its benchmark index but is still an excellent investment for a Roth IRA account. The minimum initial investment for this fund is $15,000, and it has annual fund operating expenses of 1.03%.

MainStay MacKay S&P 500 Index Fund (MSXAX)

This passively managed fund seeks to match the total return of the Standard & Poor's (S&P) 500 Index. The fund accomplishes this through a portfolio composed of stocks and cash. Information technology, healthcare, consumer discretionary, financials, and communication services were the top five sectors as of September 30, 2021. Investors in this fund own a fractional interest in each of the 500 largest publicly traded corporations in the United States, providing increased diversity. The minimum initial investment for this fund is $15,000, and it has annual fund operating expenses of 0.54%.

MainStay Convertible Fund (MCOAX)

The MainStay Convertible Fund adds diversity to an investment portfolio by investing in a unique class of securities known as convertible securities. These include bonds, preferred stock, or corporate debt that can be converted into a corporation's common stock while paying interest or dividends to the fund. The fund's top five sectors as of September 30, 2021, were consumer non-cyclical, technology, communications, energy, and consumer cyclical. The minimum initial investment for this fund is $15,000, and it has annual fund operating expenses of 0.96%.

Taxes on Investments

When withdrawing money from an investment account, it is important to understand the different types of taxes that may apply. The IRS considers withdrawals from investment accounts as income, and therefore, taxes must be paid. Here are some common types of taxes on investments:

• Capital Gains: When you sell an investment for a profit, you are required to pay taxes on the capital gains. The amount of tax depends on how long you held the investment. For short-term capital gains (held for less than 12 months), you typically pay taxes at your regular income tax rate. For long-term capital gains (held for more than 12 months), the tax rate is usually between 0-20%.
• Taxes on Dividends: When you own stocks, mutual funds, or Exchange-Traded Funds (ETFs), the companies pay dividends as income. This income is reported to the IRS, and you are responsible for paying taxes on it. The tax rate can range from 0-20%, depending on the duration of your investment and your tax bracket.
• Taxes on Interest: Interest earned on savings accounts, CDs, bonds, or other long-term investments is generally taxable at your regular income tax rate.
• Taxes on 529 Accounts: Withdrawals from 529 college accounts are typically tax-free as long as the funds are used for qualified education expenses.
• Taxes on IRAs: The taxes on Individual Retirement Accounts (IRAs) depend on the type of IRA you have. Withdrawals from a Roth IRA are usually tax-free, while withdrawals from a traditional IRA are taxable. Early withdrawals from certain retirement accounts may also incur penalties in addition to taxes.
• Taxes on Insurance Policies: Cashing out a portion of a life insurance policy (whole, universal, or variable universal) may result in taxes on the earnings above the amount you have paid into it. This is typically treated as regular income and taxed at your normal income tax rate.

It is always recommended to consult with a financial advisor or tax professional to understand the specific tax implications of your investments and withdrawals.

Capital Gains Taxes

When withdrawing money from an investment account, there are a few things to keep in mind regarding capital gains taxes. Firstly, capital gains refer to the profits made from selling an investment, such as stocks or real estate. The tax rate applicable to capital gains depends on the duration of time the investment was held before selling, with different rates for short-term and long-term holdings.

In the context of capital gains taxes, short-term refers to holdings of one year or less, while long-term refers to holdings of more than one year. For short-term capital gains, the applicable tax rate is usually the same as your regular income tax rate, which can range from 10% to 37%. On the other hand, long-term capital gains are typically taxed at a more favourable rate of 0% to 20%. It's important to note that these rates may vary depending on your taxable income and filing status.

When dealing with investments that produce dividends, it's important to consider that even if you don't sell the underlying stock, the income received from certain dividends may still be subject to capital gains tax. Additionally, investments held within tax-advantaged accounts, such as 401(k)s or IRAs, are generally exempt from capital gains taxes while they remain in the account. However, you may be subject to regular income taxes when making qualified withdrawals, depending on the type of account.

To illustrate the concept of capital gains taxes, let's consider an example. Suppose you purchased an investment for $10,000 and held it for several years. Over time, the value of the investment grew, and when you eventually sold it, you received $19,000. In this case, your capital gain would be the difference between the selling price and the original purchase price, which is $9,000. However, if you had received dividends or made other investments with the proceeds during those years, the calculation would be adjusted accordingly.

It's worth noting that capital gains taxes are an important aspect of financial planning, but they should not be the sole factor driving your investment decisions. It's always recommended to consult with a qualified financial advisor or tax professional to ensure you're making informed choices that align with your long-term financial goals.

Taxes on Dividends

When you own stocks, mutual funds, or Exchange-Traded Funds (ETFs) in companies, the companies will pay you income in the form of dividends. This income is reported to the IRS, and you are responsible for paying taxes on this income. The amount of tax you pay depends on how long you have held the investment and which tax bracket you are in. Typically, you can expect to pay anywhere from 0% to 20% in taxes on dividend income.

For example, the MainStay Income Builder Fund (MTRAX) is a mutual fund that pays dividends to investors every month. The distribution rate as of December 31, 2021, was 2.62%. This fund is an excellent investment for a Roth IRA account, which shields the entire yield from federal income taxes.

Another example is the MainStay MacKay S&P 500 Index Fund (MSXAX), which tracks the S&P 500. Dividends are paid annually, and the fund has a distribution rate of 0.89%.

It is important to note that the tax treatment of dividends can vary depending on the specific type of investment account and your individual circumstances. For instance, with a Roth IRA, you pay no taxes when you withdraw money, whereas with a traditional IRA, your withdrawals are taxable. Additionally, there are usually early withdrawal penalties on top of taxes if you withdraw from a retirement account before a certain age. Therefore, it is always a good idea to consult with a financial advisor or tax professional to understand the tax implications of your specific investments.

Taxes on Interest

Interest paid on savings accounts, CDs, bonds, or other long-term investments is taxable at your regular income tax rate. This means that the interest accrued on these investments will be taxed at the same rate as your income.

If you have a Roth IRA, you will not pay any taxes on withdrawals, as your contributions are pre-taxed. However, with a traditional IRA, your withdrawals are taxable, and there are usually early withdrawal penalties on top of taxes if you are under a certain age.

Additionally, if you choose to cash out a portion of your life insurance policy (whole, universal, or variable universal), you will need to pay taxes on the amount of money the account has earned over what you have paid into it. This will be treated as regular income and taxed at your normal income tax rate.

It is always a good idea to consult with a financial advisor or tax professional to understand the specific tax implications of your investments and how to minimize your tax liability.

Frequently asked questions