How to Transfer Shares From One Broker to Another

Transferring shares from one brokerage to another allows investors to consolidate holdings, access different investment products, or benefit from varied fee structures and services. This process moves investment assets, such as stocks, bonds, and mutual funds, from an existing account to a new one. Investors often consider this move to align their portfolio management with evolving financial goals or to leverage a new broker’s technological platforms or customer support.

Preparing for Your Share Transfer

Before initiating a share transfer, gather specific information and understand the different transfer mechanisms. The Automated Customer Account Transfer Service (ACATS) is the most common electronic system for efficient transfers between participating brokerage firms. For assets not eligible for ACATS, such as certain mutual funds not on the National Securities Clearing Corporation (NSCC) platform, physical stock certificates, or alternative investments, a non-ACATS or manual transfer process is necessary. Non-ACATS transfers often require direct coordination between the investor and both brokers.

Collect account details from both your current (“delivering”) and new (“receiving”) brokers. This includes full account numbers, precise account types (e.g., individual taxable, joint, Traditional IRA, Roth IRA), and complete registration details like names, addresses, and Social Security Numbers or Employer Identification Numbers. Accuracy is important, as even minor discrepancies can lead to significant delays. The name and address on your account at the delivering broker must exactly match the information on the account at the receiving broker.

Confirm that the receiving broker can hold all assets from your delivering broker. Some assets, like proprietary mutual funds, limited partnerships, or fractional shares, may not be transferable to all firms. If certain assets cannot be held by the new broker, you may need to liquidate them or leave them with your original firm. Decide whether to perform a full transfer, moving all assets, or a partial transfer, selecting only specific securities to move. An “in-kind” transfer, where securities are moved without being sold, is generally preferred for taxable accounts as it avoids triggering capital gains taxes.

Conversely, a “liquidation” transfer involves selling your assets at the delivering broker and transferring the cash proceeds. This approach can simplify the transfer of incompatible assets but may result in capital gains or losses subject to taxation in a taxable account. For retirement accounts like IRAs, in-kind transfers also prevent potential taxable distributions or penalties. Verify any outstanding balances, such as margin loans or unvested shares, as these can complicate or prevent a transfer until resolved.

Ensure cost basis information for your transferred securities will be accurately provided to your new broker for future tax reporting. For “covered” securities, generally those acquired after 2011, brokers are mandated to track and transfer cost basis data to the receiving firm. This information is necessary for calculating capital gains or losses when you sell investments. Keep personal records or obtain statements from your delivering broker detailing original purchase prices and dates.

Initiating the Transfer Request

After completing preparatory steps, the transfer process begins, typically with the receiving broker. For most securities transferred via ACATS, the new brokerage firm is responsible for starting the transfer on your behalf. This streamlines the process, as the receiving firm communicates directly with your current broker to coordinate asset movement. Your primary action involves providing the new broker with the necessary authorization.

You will generally need to complete a Transfer Instruction Form (TIF), sometimes called an ACATS form, provided by your receiving broker. This form collects the details gathered during preparation, including your current brokerage account number, exact account title, and account type. Ensuring all information on this form precisely matches the records held by your delivering broker is important to prevent delays or rejections.

Some brokers offer online portals for initiating transfers, allowing electronic submission of the TIF. Other firms may require you to print, physically sign, and then mail or upload a scanned copy. For certain transfers or accounts, such as those involving significant value or ownership changes, a Medallion Signature Guarantee might be required to verify your signature. This added security helps prevent fraudulent transfers.

For transfers not handled by the ACATS system, such as physical certificates or certain alternative investments, the initiation process differs. You may need to directly contact both your delivering and receiving brokers to understand their specific requirements and forms for these manual transfers. These non-ACATS transfers often involve more paperwork and direct communication between you and the institutions involved. Once the TIF is submitted, the receiving broker electronically sends the transfer request to the delivering broker through the ACATS system.

Monitoring and Finalizing Your Transfer

Once your transfer request has been initiated, you can track its progress. For ACATS transfers, the process usually takes three to seven business days from the time the receiving firm submits the request. Some transfers may complete as quickly as four business days. Non-ACATS transfers, however, can take considerably longer, potentially extending to a month or more due to manual processing.

You can monitor the status of your transfer through your new broker’s online portal, which provides real-time updates. Direct communication with their customer service department can also provide insights into the transfer’s progression. During this period, avoid placing new trades in the account being transferred, as this can complicate or delay the process. If any issues arise, proactive engagement with both brokerage firms can help resolve them efficiently.

Several common scenarios may emerge during a transfer. If certain assets are rejected, it might be because the receiving broker does not support them, or there are unmatched account details. In such cases, you may liquidate incompatible assets, transfer them manually, or leave them with the original broker.

Cash balances, pending dividends, or interest payments may not transfer concurrently with your securities and might be sent separately or after the main transfer is complete. Verify that all cost basis information for your securities has been accurately transferred to the new account, especially for tax reporting purposes. Brokers are required to transfer cost basis data for “covered” securities, but you should confirm its accuracy upon receipt. Open orders in your delivering account, such as buy or sell orders, may be canceled during the transfer process, and margin accounts will be reviewed by the receiving firm based on their policies, potentially affecting the transfer timeline.

Upon successful completion of the transfer, confirm that all intended assets have arrived in your new account and that their quantities and cost basis information are correct. Once satisfied that all assets have moved, you may decide to close your old brokerage account. Some brokers may automatically close accounts with zero balances after a full transfer. However, if you performed a partial transfer or the account remains open, you might need to formally request its closure to avoid inactivity fees or minimum balance requirements.

Retain all relevant tax documents from both your delivering and receiving brokers for the year of the transfer. This ensures a complete record for tax filing purposes, as activity from both accounts will contribute to your annual tax statements.