How to Delete Your ETrade Account Step by Step
Learn how to close your ETrade account properly by verifying eligibility, managing assets, and submitting a closure request to ensure a smooth process.
Closing an ETrade account requires careful handling of assets to prevent fees or complications. Whether switching brokers or simply no longer needing the account, following the correct steps ensures a smooth process.
Confirming Eligibility to Close the Account
Before initiating closure, verify that your account meets the necessary conditions. Outstanding balances, pending transactions, or margin loans can delay the process. Unsettled trades must clear first, which typically takes two business days under the T+2 settlement rule.
Margin accounts require full repayment of any outstanding loan balance. If under a margin call, you may need to deposit funds or sell positions to meet the required maintenance level.
Certain accounts, such as IRAs, have additional considerations. Closing a traditional or Roth IRA may result in tax consequences, including early withdrawal penalties if you’re under 59½. The IRS imposes a 10% penalty on early distributions from traditional IRAs, and withdrawn funds may be subject to income tax. A direct rollover to another provider can help avoid these penalties.
Liquidating or Transferring Remaining Assets
Decide whether to sell or transfer holdings before closing the account. Selling investments may trigger capital gains taxes. Short-term gains (assets held for one year or less) are taxed at ordinary income rates, up to 37% in 2024. Long-term gains (assets held for more than a year) are taxed at 0%, 15%, or 20%, depending on taxable income.
Mutual funds may charge redemption fees if sold within a certain timeframe, typically 30 to 90 days. Review any pending dividend or capital gains distributions before selling. Options traders should ensure no open contracts remain, as unexercised options could expire worthless or result in unexpected assignments.
To transfer assets instead of selling, use an Automated Customer Account Transfer (ACAT) to move eligible securities to another broker without triggering a taxable event. Some assets, such as proprietary mutual funds or certain fixed-income securities, may not be transferable, requiring liquidation. An ACAT transfer typically takes five to seven business days, and ETrade charges a $75 transfer-out fee as of 2024.
Withdraw any remaining cash before closing the account. Funds in an ETrade sweep account or money market fund may require manual transfer to a linked bank account. ACH transfers take one to three business days, while wire transfers are faster but may incur fees. Ensure all expected dividends or interest payments have been credited before withdrawing funds, as residual amounts left in the account after closure could be subject to escheatment under state unclaimed property laws.
Submitting the Closure Request
Once all assets are addressed, submit the closure request. ETrade allows online requests or customer service contact for account closure. The online process is typically faster, but joint or corporate accounts may require additional verification.
To close the account online, log in and navigate to “Account Services” or “Close Account.” The closure form will prompt confirmation of personal details and acknowledgment of any outstanding obligations, such as pending tax documents or fees. Cancel any recurring transfers or linked external accounts to prevent unexpected activity.
If closing by phone, ETrade representatives may ask security questions for verification and might suggest alternatives, such as converting the account instead of closing it. For written requests, ETrade may require a signed letter with the account number and reason for closure, which can be mailed or faxed.
Confirming the Final Account Status
After submitting the closure request, verify that the account has been fully deactivated. ETrade typically processes closure requests within a few business days, though delays may occur due to unresolved tax reporting obligations or pending adjustments. Look for email confirmations or secure messages to ensure the request has been processed.
A closed brokerage account does not immediately disappear from financial records. ETrade retains historical statements and tax documents for several years in compliance with SEC Rule 17a-4, which mandates record preservation. Download past statements, trade confirmations, and tax forms, such as Form 1099-B for capital gains reporting, as access may be restricted after closure.
If the closed account was linked to an external financial institution for automated deposits or bill payments, update those connections to prevent transaction errors. Monitoring credit reports or financial aggregators for any unexpected references to the closed account can help identify administrative errors.