Transferring stocks from one broker to another is a bit of a process, however, and it can vary from broker to broker. Often, brokerage firms will add obstacles to make it harder to transfer stocks out of your account, so it’s important to be ready to jump through a few hoops or to pay fees to complete the transfer.
Can I Transfer Stock From One Brokerage to Another?
Yes, it is possible to transfer stocks and other investments from one brokerage account to another. There are many reasons that you might want to do this. For example, you might have started a new job that uses a different company for its retirement accounts. Keeping all your investments with the same broker can make it easier to manage your money. Another reason to change would be to improve upon your current broker’s fee structure. Most transfers are handled using an automated system. Still, the full process can take about a week, so you should be ready to wait for it to complete. Keep in mind that you won’t be able to buy or sell securities during the process.
What Is an Automated Customer Account Transfer Service (ACATS)?
Most brokerage account transfers happen through the Automated Customer Account Transfer Service (ACATS). ACATS is designed to make transfers easier, especially for simple accounts that mostly hold basic assets like stocks, bonds, and cash. ACATS lets the brokers involved in both sides of the transfer quickly and automatically review and settle account transfers to speed the process and keep costs low.
How To Transfer Stock Between Brokerage Accounts
To transfer your investments to a new broker, follow these steps:
1. Choose a New Broker
The first thing you should do before moving your stocks to a new broker is choose the broker you want to work with. You should consider things like the fees charged, investments offered, and other factors such as whether you have employer retirement accounts with the broker.
2. Submit a Transfer Initiation Form
A Transfer Initiation Form (TIF) is what gets the whole process started. The broker you want to transfer funds to should give you this form. Fill it out and make sure that all the information you provide matches the information your current broker has on file for you.
3. Wait for the Receiving Firm to Contact Your Current Broker
Once you submit the TIF, the receiving firm will contact your former broker, called the delivering firm. The delivering firm will validate the request by matching the information on the TIF to the information it has on file for you. If there are any discrepancies, be ready to work with the brokers to resolve them. This is also the time you’ll have to pay a fee to your new broker, if it charges one for account transfers.
4. Work With Your New Broker to Make Sure it Accepts All Your Assets
Once your old broker accepts the TIF, your new broker will review all the assets in your account to make sure that it’s willing to accept them. For example, if you have shares in mutual funds operated by your old broker, there’s no guarantee the new broker will accept them. This can also happen if you have a margin account, as your new broker may have different credit requirements. If an issue comes up, work with your new broker to resolve it.
5. Wait for the Transfer To Be Completed
Once any issues are resolved, all you have to do is wait. The transfer can take about a week to complete.
Special Circumstances That Can Affect the Stock Transfer Process
There are a few scenarios that could impact the process. You’ll want to watch out for pitfalls, if these apply to you.
Transferring Retirement or Other Tax-Advantaged Accounts
Transferring a tax-advantaged account, like an individual retirement account (IRA), requires a bit more care than a typical transfer. IRS regulations give you a limited amount of time to complete the transfer. If you fail to get the money back into an IRA at your new broker in time, it could be treated as a distribution and be subject to taxes and penalties.
Transferring Stocks to Another Person
If you’re transferring stocks to another person instead of an account you own, you’ll want to watch out for gift taxes. Each year, an individual can give up to a certain amount ($16,000 in 2022) to another individual without incurring gift taxes. Any gifts above the limit start counting against your lifetime gifting limit, which can come into play when your heirs inherit stocks from you. That means you’ll have to keep track of how much you give.
Transferring Complex Securities or Accounts
Many people have basic brokerage accounts that hold simple securities such as stocks, bonds, and exchange-traded funds (ETFs). These are usually easy to transfer between brokers. The receiving firm will need to be willing to accept the securities in your account before the transfer can complete.
Transferring Assets Between Accounts at the Same Broker
If you are moving money between two different accounts at the same brokerage firm, it’s often much easier than moving investments between different brokers. This is because your broker won’t have to work with another company to facilitate the transfer. If you’re opening an investment account for a child or young relative, it’s probably a good idea to use the same brokerage for this that you use yourself.
What To Watch Out For While Transferring Brokerage Accounts
Usually, the account transfer process goes smoothly, but there are a few things you should watch out for. As discussed, if you have a margin account or own unusual securities, ask your new broker ahead of time whether it has policies about accepting those kinds of accounts in transfers. In general, it’s a good idea to ask your new broker questions about the transfer process before you begin so you can get an idea of how long transfers take and whether you can do anything to make the process easier. One important thing is to make sure that you do not initiate any transactions during the transfer process. Trying to buy or sell shares in the middle of a transfer is a good way to make things more complicated. Be ready to keep your portfolio as is through the transfer process. If you find a new brokerage company that offers higher-quality investment options, better customer service, or lower fees than your current broker, it is possible to open a new account and move your stocks to it. The process is usually painless, but it can take a week or so. Knowing how the process works can help you make sure that it will go smoothly.
