Table of Contents
How to transfer a brokerage account in 6 steps
What should I keep in mind before transferring accounts?
3 things to consider before transferring a brokerage account
The bottom line
Aug 12, 2022
6 min read
There are many factors to consider before switching to a brokerage account including fees, tax implications, and types of securities. To understand that is beneficial.
A brokerage account typically houses financial securities for investment purposes. Investors with this type of account can invest in stocks, bonds, exchange traded funds (ETFs), options, and mutual funds.
Since assets in a brokerage account aren’t required to be held indefinitely, it may be helpful to understand the steps in how to transfer a brokerage account.
Transfers are initiated by the new brokerage firm, although the old brokerage will also have to take certain actions to complete the transaction.
There are two types of transfers; one is very quick and one is a bit slower. The two types also have different tax implications.
. This type of transfer moves assets or securities—without buying or selling—from the old brokerage account to the new one. Since no investments are being bought or sold, taxes aren’t triggered. In-kind transfers are also known as ACAT, so named for the Automated Customer Account Transfer Service, the electronic system used to transmit assets between brokerage firms. The process could take about six days or longer, depending on if transferring the account to a non-brokerage firm like a bank or credit union, or due to investor error on the request forms.
In some cases, an in-kind transfer isn’t possible. This may be because a brokerage firm doesn’t participate in ACATS, an investor is doing a partial transfer, or the new firm doesn’t offer the same types of securities. With a manual transfer, investments are liquidated, or sold, and transferred as cash for deposit into the new brokerage account. A non-ACAT transfer can take significantly longer since it’s typically paper-based versus electronic. This type of transfer can expose the investor to more risk because there is no time limit for completion, and markets may fluctuate between the beginning and end of transfer—a period when the assets are inaccessible.
Before initiating a transfer, it’s necessary to open an account with the new brokerage, also called the receiving firm. In most cases, this is done online by providing information such as your name, address, Social Security number, and the type of account opening.
The receiving firm will help guide investors through the transfer process step-by-step, including the types of forms needed when initiating the transfer.
Log into your existing brokerage account and download as many statements as possible. Keeping these records on file might be useful if necessary to reference them in the future, such as for tax purposes. Plus, recent account statements will likely include financial information the new brokerage firm needs when reviewing and opening the new account, and initiating the transfer.
The new brokerage typically will ask the investor to fill out a transfer initiation form, also known as a transfer instruction form, to initiate the move from one firm to another. Account information that may be requested includes Social Security number, details about the old brokerage account, as well as the types of assets and amount to be transferred.
The new brokerage also may ask for additional documentation, such as brokerage statements from the old firm, though this requirement can vary between brokerage firms.
These forms include instructions to the brokerage on the type of transfer and description of the assets. Incorrect information or errors could result in fees, delays, or the brokerage selling assets before transfer, for example, which could lead to tax consequences.
Once the transfer initiation form is submitted for an in-kind transfer, the new brokerage will contact the old one to start the transfer. If doing a manual transfer, the first step may be to liquidate any assets, and in some cases, do the transfer yourself.
If requesting an in-kind transfer, the old brokerage firm has three business days to respond to the transfer request from the new one. It may reject the request if the form has been filled out incorrectly, or if there are questions about ownership of the account. Contacting the old brokerage can be helpful in fixing any errors.
Stay in touch with both brokerages to see whether each has done its part to complete the transfer process. In many cases, it’s as simple as logging into the account online and checking the status: Has the new brokerage received the transfer initiation form request, processed it, and initiated the transfer with the old brokerage firm?
The transfer is complete when assets enter the new account. An investor can confirm this by contacting the new brokerage, or in some instances, the new firm will provide updates electronically from start to finish.
There are certain types of securities that can’t be transferred in-kind, including:
A type of investment issued by an insurance company that makes periodic payments designed to last for the investor's life or a specified number of years.
Shares of common stock that are deemed worthless and stop paying dividends.
A method in which accredited investors can invest in non-publicly traded ventures by purchasing ownership shares.
Mutual funds, money market funds, or securities that aren't available at the new brokerage.
Holding any of these types of securities may cause delays when submitting the transfer request. So, an investor will need to decide (and instruct the old brokerage firm) whether to leave these securities in the existing account or sell them and transfer the proceeds.
Delays may also occur if transferring retirement accounts, such as traditional or Roth IRAs. These types of accounts require a financial institution to act as the holder or custodian—with a custodial arrangement between the investor and old firm. Transfers may be disrupted if there are any outstanding fees—such as for withdrawals—or if the custodian doesn’t allow transfers.
Investors may want to think through the following three questions before switching brokerage firms.
Many brokers offer low fees or zero-commission trading. A brokerage account that charges high fees may reduceinvestment returns.
Depending on the account and the types of securities owned, a brokerage may charge fees for closing the account and transferring securities to a new firm. Some brokerages, however, offer incentives such as bonuses for opening a new account that could make up for the fees paid.
Transferring retirement accounts could result in the transfers being treated as distributions if the rollover is not handled properly. In such cases, investors face the possibility of paying taxes and penalties. Selling assets before transferring them could also trigger capital gains tax.
There are many factors to consider before switching to a new brokerage account including fees, tax implications, and types of securities offered. There are different procedures and rules for transferring assets manually or in-kind. Contacting both the new and old brokerage firm will help in understanding the paperwork and process involved with a transfer.
At Titan, we are value investors: we aim to manage our portfolios with a steady focus on fundamentals and an eye on massive long-term growth potential. Investing with Titan is easy, transparent, and effective.
Get started today.
Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Titan has not independently verified such information and makes no representations about the accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Titan has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any strategy managed by Titan. Any investments referred to, or described are not representative of all investments in strategies managed by Titan, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see Titan’s Legal Page for additional important information.
You might also like
Understanding Portfolio Construction: How to Diversify and Assess Risk
Constructing a portfolio that minimizes risk while maximizing potential gains is a delicate and ever-changing balance. Learn about the process of creating a portfolio.
What Are Interval Funds and How Do They Work?
Interval funds are investment companies that combine characteristics of both open and closed-end funds. Investors can buy them at any time but sell them at certain intervals.
How To Invest In REITs
Some REITs are traded on major stock exchanges, giving individual investors the opportunity to invest in real estate without needing to buy or manage the property.
What Is Return on Investment (ROI)?
Return on investment is a useful basic measure of the profitability of an investment or business project. But it has limitations that investors use to have annual-equivalent returns.
© Copyright 2023 Titan Global Capital Management USA LLC. All Rights Reserved.
Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.
Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.
The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit www.titan.com/legal for applicable terms and conditions and important disclosures.
Cryptocurrency advisory services are provided by Titan. Cryptocurrency trading is provided by Bakkt Crypto Solutions LLC ("Bakkt Crypto"). Bakkt Crypto is not a registered broker-dealer or a member of SIPC or FINRA. Cryptocurrencies are not securities and are not FDIC or SIPC insured. Bakkt Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency execution services are provided by Bakkt Crypto (NMLS ID 1828849) through a software licensing agreement between Bakkt Crypto and Titan. Please ensure that you fully understand the risks involved before trading: bakkt.com/disclosures.
Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
Contact Titan at firstname.lastname@example.org. 508 LaGuardia Place NY, NY 10012.