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How to Transfer Brokerage Accounts: 6 Steps

By Michael Flannelly · December 23, 2022 · 11 minute read

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How to Transfer Brokerage Accounts: 6 Steps

If an investor is unhappy with their current brokerage firm’s service or tools, they shouldn’t let the hassle of the transfer process keep them from switching to brokerages. Putting off a transfer may keep investors from future portfolio growth because they don’t enjoy using the platform or are paying high fees.

Transferring brokerage accounts is not the huge hassle people might think it is. While it’s not as fast as certain cash payment services, the process only requires a few forms and patience to get it done. Keep reading to learn more about moving your investments from one account to another.

When to Consider Switching Brokers

There are several reasons why an investor might consider switching brokers, including the following:

•   High fees: If you pay high investment fees and commissions to your current broker, you may find a more cost-effective option by switching to a different broker. Many online brokerage firms now offer very low or no commissions.

•   Lack of customer service: If your current broker is not meeting your needs in terms of the types of investment products they offer, the level of customer service they provide, or the quality of their trading platform, you may want to consider switching to a different broker that better meets your needs.

•   Changes in your investment strategy: If you plan to make significant changes to your investment strategy, such as switching to a new asset class or adopting a new approach to trading, you may want to consider switching to a broker better equipped to support your new strategy. For example, your current broker may not offer options trading, but you’d like to start using options to speculate, generate income, or hedge risk.

•   Changes in your financial situation: If your personal finances change significantly, consider reviewing your broker to ensure it is still the best fit for your needs. For instance, your current broker may have a minimum account balance you can no longer meet.

However, switching brokerage accounts can be time-consuming and potentially costly, so it’s important to consider whether the benefits outweigh the costs.

Two Ways to Transfer Assets to Another Broker

When transferring a brokerage account from one broker to another, there are two main ways investors can transfer assets: cash transfer and in-kind transfer.

Cash Transfer

A cash transfer involves selling the assets in the account and transferring the proceeds to the new broker in the form of cash. A cash transfer is a straightforward and quick way to transfer an account, but it may not be the most tax-efficient option, as it could trigger capital gains or losses that may be subject to taxes.

💡 Recommended: Capital Gains Tax Guide: Short and Long-Term

In-Kind Transfer

An in-kind transfer involves transferring the assets in the account directly to the new broker without selling them. This may be a more tax-efficient investing option, as it allows you to carry over the cost basis of the assets to the new broker. However, executing an in-kind transfer may be more complex and time-consuming, as it may require the transfer of specific securities or other assets rather than just cash.

How to Move Investments From One Brokerage Account to Another

The process for transferring cash or securities from one brokerage account to another typically involves the following steps:

1. Confirming Account Information

Before an investor starts the transfer process, they should take some time to review their existing account, taking note of the assets they hold, total amounts held, and basics like account numbers and information on file.

Having a snapshot of account totals can serve as a backup if anything goes wrong in the transfer. Investors might want proof of their assets for confidence before getting started.

2. Contacting the New Broker

To kick off the process, an investor would reach out to their new broker, also known as the “receiving firm,” in the transfer. Each brokerage firm will have a slightly different transfer process, but most accounts will be transferred in an automated process through the help of the National Securities Clearing Corporation (NSCC).

NSCC runs Automated Customer Account Transfer Service (ACATS), a service that allows accounts to be transferred in a standard way from one brokerage firm to another. ACATS should work for most transfers, including cash, stocks, and bonds.

When an investor contacts the receiving firm, they’ll receive instructions and, often, a physical or digital copy of the Transfer Initiation Form (TIF). At this stage, investors don’t need to reach out to their old brokerage firm.

3. Completing a Transfer Initiation Form (TIF)

Completing the standard TIF officially kicks off the process. Once the receiving firm has an investor’s TIF, they’ll start making arrangements with the investor’s old brokerage firm, or “delivering firm,” to send the assets over.

Investors should take care to complete the TIF thoroughly and correctly. If information (such as Social Security number, name, or address) is not the same with both the delivering and receiving firms, the request could be flagged as fraud and rejected.

That means confirming an investor’s receiving and delivering firms have the correct personal information on file.

The most common hold-up in the transfer process is an investor error in the TIF.

TIFs typically include the following information:

•   Numbers for both brokerage accounts

•   The brokerage account type, such as joint, individual, Roth IRA, trust, estate, limited liability, 401(k), etc.

•   Social Security number

•   The delivering firm’s contact information

•   Specific assets to transfer in the event of a partial transfer

4. Submitting the TIF, and Sitting Tight

The investor will submit the TIF to their receiving firm when everything looks complete. From there, the investor will wait.

While the investor can’t do much more than sit on their hands and wait, the receiving firm is entering the TIF into ACATS. This information becomes a digital request submitted to the delivering firm, requesting a transfer of assets from one brokerage to another.

When the TIF is being reviewed, investors should pay close attention to their email and phone. If there’s any mismatched information on the TIF or between the two firms, the receiving firm will likely reach out to the investor to amend the issue.

Missing outreach could mean an even longer transfer period. That’s why investors should double-check that all the information on the TIF and between the two brokerages is consistent.

If the form is correct and approved by the delivering firm within the appropriate window, they will send a list of assets to the receiving firm. Now, it’s the receiving firm’s time to accept or reject.

While uncommon, a brokerage can reject the assets. Thus, an investor might consider contacting the receiving firm before the transfer to confirm their assets will be accepted. The receiving firm gets to decide if they want to accept or reject those assets.

If the assets are accepted, the delivering firm will digitally move the holdings to the receiving firm.

5. Contacting Your Old Broker (Optional)

In the world of texting, a phone call might be the last thing a person wants to do. But a simple call could save a few bucks in the transfer process. One hiccup that can come from the process is the account transfer fee. In some instances, the delivering firm will charge an “exit fee” when an investor makes a full transfer, partial transfer or decides to close an account entirely.

To avoid the surprise of a fee, an investor may reach out to their old brokerage firm and ask if they’ll be charged a fee for leaving or transferring funds.

If the delivering firm charges a fee, investors could reach out to the receiving firm to ask if they have any promotions for new clients that would cover the cost of transfer fees.

6. Watching the New Account, and Waiting

After the delivering and receiving firms approve the transfer request, it will still take a few days for the investments to move accounts.

Investors shouldn’t be alarmed when assets disappear from both accounts for a day or two, but the process typically takes no more than six business days.

The process may take longer if the delivering firm is not a broker-dealer. The transfer often takes longer than six business days if the delivering firm is a bank, mutual fund, or credit union.

No matter the length of the transfer, it’s common for one or both of the brokerage accounts involved to be frozen. That means no trades are allowed until the process is complete.

Investors may plan ahead and avoid trading during this period. If there is a stock or fund investors are looking to sell in the near future, they might want to sell it before starting a transfer.

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Special Circumstances That Can Affect the Stock Transfer Process

Transferring Retirement or Other Tax-Advantaged Accounts

Transferring a tax-advantaged brokerage account, such as an individual retirement account (IRA) or 401(k) account, from one broker to another generally follows a similar process to regular brokerage accounts.

However, if you transfer a tax-advantaged account, you may need to follow certain rollover rules to avoid triggering taxes. For example, if you transfer an IRA, you generally have 60 days to complete the rollover and deposit the assets in the new account to avoid taxes and penalties.

💡 Recommended: IRA Transfer vs Rollover: What’s the Difference?

Transferring Stocks to Another Person

Transferring or gifting stocks to another person may have tax implications. For instance, transferring stocks may trigger gift taxes depending on their value.

Understanding Brokerage Transfer Fees

Brokerage account transfer fees are charges that may be assessed by a broker when an investor transfers their account from one broker to another. The new or old brokerage may charge these fees, which can vary depending on the broker and the assets being transferred.

Some common types of brokerage account transfer fees include:

•   Account transfer fees: These are fees that the current broker may charge for transferring the account to the new broker.

•   Termination fees: Some brokers may charge termination fees for closing an account or transferring assets out of the account.

•   Trade execution fees: If you need to sell any assets in your account to transfer them to the new broker, you may be subject to trade commission fees.

Keeping Records From Your Old Account

It’s generally a good idea to keep records from your old brokerage account following an account transfer, as these records may be helpful for various purposes.

For example, you may need to refer to your old brokerage account records for tax purposes. The information in these records can help you accurately report any capital gains or losses subject to taxes.

You may also need to refer to your old brokerage account records if you need to resolve any disputes or errors related to the transfer of your account or the assets held in the account.

Tax Implications of Switching Brokers

The tax implications of switching brokers will depend on several factors, including the type of assets held in the account, the method used to transfer the assets, and your tax situation.

If you sell and cash out stocks in your account to transfer them to the new broker, you may incur capital gains or losses that could be subject to taxes.

Additionally, the transfer may affect the cost basis and holding period of the assets in your account. The cost basis is the amount you paid for the asset, and the holding period is the length of time you have owned the asset. These factors can affect the amount of any capital gains or losses that may be subject to taxes.

Switching to SoFi Invest

People might put off transferring their brokerage account because they believe it’s involved and complicated. While it’s not instant, the process typically takes just six business days from start to finish. That means investors are only a few days and a simple form away from a new brokerage service. As long as an investor is careful and asks their receiving firm the right questions before getting started, they should avoid any significant roadblocks during the transfer.

By opening an online brokerage account with SoFi Invest®, you can take control of your financial portfolio with a DIY approach. You can trade stocks, exchange-traded funds (ETFs), fractional shares, and more with no commissions, all in the SoFi app.

Take a step toward reaching your financial goals with SoFi Invest.

FAQ

Can you transfer brokerage accounts?

It is generally possible to transfer a brokerage account from one broker to another. Transferring an account typically involves requesting a transfer form from your new broker and completing the transfer form and any other necessary documents.

How do you transfer stock to a family member?

To transfer stock to a family member, you will need to follow the steps for selling or transferring the stock following the policies of your brokerage firm. This may involve completing and submitting a stock transfer form or other required documentation to your broker and paying applicable fees.

What is an Automated Customer Account Transfer Service (ACATS)?

The Automated Customer Account Transfer Service (ACATS) is a system that facilitates the transfer of securities and cash between brokerage firms in the United States. It allows investors to transfer their accounts from one broker to another without manually selling and buying securities or transferring cash balances, which can streamline the process and minimize the risk of errors.

How will I know that my transfer is complete?

Once you have initiated the process of transferring your brokerage account from one broker to another, you should receive confirmation from both the current and new brokers when the transfer is complete. This confirmation may come in the form of a written statement or an email.


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