Can I Transfer Investments From One Broker to Another?

Transferring investments from one brokerage firm to another is a common practice for many investors. This process allows individuals to move their holdings without selling assets, which can be beneficial for tax purposes and maintaining market exposure. Investors often consider such transfers for various reasons, including consolidating multiple accounts, seeking different services, or changing preferences to align with new financial goals.

Understanding Investment Account Transfers

The primary mechanism for moving investment accounts between firms in the United States is the Automated Customer Account Transfer Service (ACATS). This electronic system facilitates the transfer of eligible securities, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs), directly from one brokerage to another. ACATS streamlines the process, making it more efficient and less prone to manual errors compared to older methods. For a transfer to occur via ACATS, both the delivering and receiving brokerage firms must be members of the National Securities Clearing Corporation (NSCC).

However, not all assets or situations are suitable for an ACATS transfer. Certain investments, such as privately held securities, annuities, illiquid assets, or proprietary mutual funds not offered by the receiving broker, typically cannot be transferred through ACATS. In these instances, alternative methods are required, which might involve liquidating the assets and transferring the cash proceeds, or arranging for physical certificate delivery or direct registration of the securities. Such non-ACATS transfers can be more complex and may take a longer duration to complete.

Investors can choose between a full transfer or a partial transfer. A full transfer moves all assets from the old account to the new one, typically closing the account at the delivering firm. A partial transfer involves moving specific holdings or a portion of the account, leaving the original account open. The choice depends on the investor’s objectives and assets held.

Preparing for Your Investment Transfer

Before initiating an investment account transfer, gather specific and accurate information. You will need the exact account numbers for both your current (delivering) and new (receiving) brokerage accounts. Additionally, confirm the account type, such as a taxable brokerage account, Traditional IRA, or Roth IRA. Ensure the registration details, including account holder names and addresses, precisely match between both firms, as discrepancies can lead to significant delays.

Review your current investment holdings to determine which assets are eligible for an ACATS transfer. Common non-transferable assets often include certain proprietary mutual funds, annuities purchased directly from an insurance company, limited partnerships, and some alternative investments. For these assets, you might need to sell them and transfer the cash, or keep them at the original firm. Confirm the receiving brokerage supports all the types of securities you intend to transfer, such as fractional shares.

While the ACATS system itself does not typically impose a fee, some delivering brokerage firms may charge an account closing or transfer-out fee. These fees can range from approximately $50 to $125. It is prudent to inquire with your current broker about any potential fees they may levy for outgoing transfers. Some receiving brokers might offer to reimburse these transfer fees, so it is worth asking them about such policies.

Direct transfers of “like” accounts, such as moving a Traditional IRA to another Traditional IRA, or a taxable brokerage account to another taxable brokerage account, are generally not considered taxable events. This means you typically will not incur capital gains or losses simply by moving assets in-kind. However, if you liquidate assets before the transfer, or if you change the account type, these actions could have tax consequences. Consulting with a tax professional is recommended for specific situations to understand any potential tax liabilities.

Investment transfers are not instantaneous. An ACATS transfer typically takes approximately three to six business days to complete once initiated. Non-ACATS transfers or those involving manual processes can take significantly longer, sometimes up to a month. Delays can occur due to unmatched account information, unverified assets, or outstanding fees at the delivering firm. During the transfer period, you generally cannot trade the assets that are in transit.

Executing the Transfer Process

The new, receiving brokerage firm typically handles the initiation of the transfer request. You will usually submit the transfer request through their online portal or by completing a physical form provided by them.

You will be required to accurately fill out the transfer initiation form provided by the receiving broker. This form will request the details you gathered during the preparation phase, such as your account number at the delivering firm, the type of account, and whether it is a full or partial transfer. Ensure all information on this form matches the records of your delivering broker precisely to avoid delays.

Proper authorization is a necessary component of the transfer process. This typically involves providing an electronic signature or a wet signature on the transfer form, which grants the new brokerage firm the authority to request your assets from your previous broker.

After submitting the transfer request, you can monitor its progress, typically through the receiving brokerage firm’s online platform. Many firms provide a status tracker that updates as the transfer moves through different stages. If you have questions or concerns during the process, contacting the customer service department of your new broker can provide updates and address any issues.

Upon completion of the transfer, performing a post-transfer reconciliation is advisable. This involves verifying that all expected assets have been successfully transferred into your new account and that cash balances are accurate. You should compare the holdings listed in your new account with the statements from your old account to ensure everything moved as intended.