How to Transfer a Brokerage Account Quickly and Easily

As you grow as an investor, you might decide you want to move to a new brokerage firm.

Your brokerage firm may not be keeping up with the times. Other brokerage firms might have started offering lower fees or better research tools.

No matter why you want to move to a new brokerage firm, you should know the process isn’t as simple as clicking a button -- it can be complicated and takes a bit of time to complete. 

That said:

It isn’t too difficult for the typical investor.

If you’re ready to move to a new brokerage firm, you need to first learn how to transfer a brokerage account.

Here’s what you need to know.

As always, consult a professional to find out how you could be impacted specifically. Tax or investment professionals may be able to help you understand the specifics for your situation.

How Assets Get Transferred 

Transferring a brokerage account isn’t always easy.

When you think about it, there are a lot of details involved. 

Usually, people want to transfer the assets they hold within their account. They don’t want to sell their positions then move cash.

This makes sense.

Selling your investments could have tax consequences including capital gains taxes. Transferring the assets as they are is called an in-kind transfer. 

Some people have many investments in their brokerage accounts. All of those assets will have to get moved which can end up being fairly complex.

Fortunately, a system exists to facilitate transferring assets from one brokerage firm to another. It is called the Automated Customer Account Transfer Service or ACATS for short. The ACATS system is operated by the National Securities Clearing Corporation (NSCC).

The best part:

You don’t have to deal with ACATS directly.

Instead, your old and new brokerage firms may work with ACATS to transfer your investments.

Two Ways to Transfer Your Account

There are two main ways to transfer your account.

• You can transfer your assets, such as stocks, bonds, mutual funds and ETFs, in-kind as they are. 
• You can sell the assets. Then, you can transfer the cash to a new brokerage firm. 

Here’s how these two methods work.

In-kind transfer

An in-kind transfer is generally viewed as more complex than a cash transfer.

Your old brokerage firm has to transfer each individual investment position you have to the new brokerage firm. 

If you owned 100 different individual stocks, each of those stocks would have to be transferred.

This includes information about how many shares you own. It should also include your cost basis in your investments. 

Cash transfer

If you’re only transferring cash, the process is quicker and easier.

All the brokerage firm has to do is transfer your cash to the new firm.

Depending on the account type, you may even be able to do this yourself.

For a taxable brokerage account, you could simply request the cash. Then, you could deposit it into the new brokerage firm yourself.

However, things get more complicated with other types of accounts. 

For instance, retirement accounts have special rules regarding how to transfer your assets. If you don’t follow the rules, the transfer could be treated as a distribution. 

If you’re not yet retirement age, this could result in paying both taxes and penalties on tax-advantaged funds that weren’t properly transferred. 

That’s why it is often best to let your new brokerage firm handle the transfer process.

The Transfer Process

The transfer process isn’t difficult from an investor’s perspective. 

1. Preparations

Before you start the process, you should do a few things to prepare.

Save your statements

Download all available information about your old brokerage account.

It is important to do this before you leave your current brokerage firm.

This includes all statements and information about your investments including cost basis. 

Technically, cost basis information should be transferred.

However, the information is so important that you should keep your own records. This way you have the information in case there are issues during the transfer.

Check for transfer fees

You should also check with your old brokerage firm to see if there are any fees to transfer assets out of your account or to close your account.

In some cases, you may be able to negotiate with your new broker or earn a transfer bonus to help pay these transfer fees.

Some brokerage firms don’t charge fees while others may charge over $100.

It’s an unfortunate part of a break up with a brokerage firm, but it’s often part of the process.

2. Contact your new brokerage

In general, it’s best to get the process started by contacting the new brokerage firm you want to move your assets to.

Why?

Your old brokerage firm has no incentive to help you. Once you leave, they won’t make any money providing services for you.

The new brokerage firm, sometimes called the receiving firm, has an incentive to help you. They’ll get to manage your assets and collect fees from managing your account.

If you trade on margin, you may be required to pay off any margin loans before you make the transfers. Talk to your new brokerage firm to see how they deal with margin loans for account transfers before you start the process. 

Ask any other questions you may have before you start, as well.

It’s easier to get answers now before mistakes are made than afterward when some actions may not be reversible.

3. Fill out a transfer initiation form

The new brokerage firm will likely have you fill out a transfer initiation form.

Fill this form out very carefully. 

Double-check to make sure the information you provide is exactly how it is listed on your old brokerage account.

Any errors could cause issues and delay the process.

Commonly requested information includes:

• Your name
• Your Social Security Number
• Your account number
• Your old brokerage firm’s (sometimes called the delivering firm) information
• Whether you want a complete or partial transfer of assets

Importantly, brokerages may require that you obtain a medallion signature guarantee as part of your transfer application.

4. Wait for the assets to complete

Once the transfer initiation form is completed, the asset transfer process will likely begin.

During this time frame, you will not be able to make any trades or access your investments.

Instead, you have to wait until they arrive at your new brokerage firm.

Depending on the complexity of your transaction, this could be a relatively quick or a somewhat slow process.

If you’re only dealing with cash, it will likely be faster than if you’re dealing with multiple different types of investments. 

Transfers that go through ACATS will often complete within 5 to 10 business days. More complex account transfers, including transfer initiated via paper mail, may take several weeks.

How long does it take to transfer brokerage accounts?

5. Verify transferred assets

Once you get notified the brokerage transfer is complete, log in to your new brokerage account to verify everything was transferred properly. 

Check the number of shares you held for each type of investment because chances are the values of your investments changed over the week it took to complete the transfer.

Concerns During Brokerage Account Transfers

When transferring assets to a new brokerage firm, most people have concerns about the process.

They can usually be addressed with a bit of forethought.

No trades

For instance, most people don’t like the idea of not being able to make trades in their accounts during the transfer period. 

To solve this issue, make sure you’re comfortable with your holdings before making the transfer request.

Ideally, long term investors don’t make trades regularly, anyway.

Price changes

Another big concern people have is they’ll miss out on investment growth during the transfer. 

If the transfer is done in-kind, your assets will transfer exactly as they were before. If you had 100 shares of Amazon before, you’ll have 100 shares of Amazon after. 

If Amazon’s price increases during the transfer, your shares will be worth more when they land in your new brokerage account.

Potential Tax Impact

If your in-kind asset transfer is managed correctly, there may be no tax impacts to report at all.

However, there are plenty of ways transferring your assets to a new brokerage firm could trigger tax implications.

You should consult a tax professional prior to making the transfer to make sure you understand any and all tax implications that may result from moving to a new brokerage firm for your specific situation.

That said:

Be very careful when transferring brokerage firms when you have retirement accounts. There are certain rules you must follow to avoid having the asset transfer be considered a distribution.

For instance, the money must be deposited in the new account within 60 days. If you try to handle the transfer yourself and forget, you could exceed this 60-day limit.

This can result in you having to pay both taxes and penalties on the distribution amount. If you’re transferring a large retirement account, the results could be disastrous.

That’s why it’s a good idea to have your new brokerage firm handle the process. They can make sure everything goes according to plan.

Asset sales

The other major tax implication usually has to do with selling assets.

If you’re required to sell some of your investments to complete the transfer or choose to do so anyway, that could trigger capital gains taxes. 

Like most tax issues, it will depend on what type of account your assets are held in, your cost basis and other factors specific to your situation. 

Transfer Your Brokerage Account When You’re Ready

If you aren’t happy with your brokerage account, you now know how to transfer a brokerage account.

Transferring a brokerage account is a fairly easy process for you as an individual investor. 

Research other brokerage firms to see if there are better options for you.

If you find one, start the process of transferring your account to a new brokerage firm.

Once the transfer is complete, you can continue managing your investments as usual with your new brokerage firm.