If you plan on transferring a brokerage account from one online brokerage service to another, beware the account transfer fees charged by some providers, which can be as high as $125. Investors can cover this cost by taking advantage of reimbursement promotions offered by some online brokerages. Alternatively, you could also liquidate all holdings and close an account to open a new one at a different brokerage - although that has some tax implications that we'll explain below.
- What is an Account Transfer / ACAT fee?
- Moving Your Brokerage Account: Liquidating vs. Transferring
- Comparison of ACAT Fees & Promotions across Brokers
An account transfer fee is charged to the investor when an account from one brokerage is fully or partially transferred to another brokerage. An account transfer happens after an investor opens a new account and requests that their new broker begin the process. The new online broker will facilitate the transfer with the investor’s current broker, and the current broker will charge the investor an account transfer fee. Any stocks held are not sold during an account transfer, so a tax event does not occur during an account transfer.
An account transfer between brokerages is made through the Automated Customer Account Transfer System (ACATS), which is why this fee is also called the ACAT fee. Some firms charge different fee amounts for a full transfer and a partial transfer.
There are two ways to effect an account transfer: liquidating and closing the account, or transferring holdings seamlessly.
Before choosing to transfer your account from one online brokerage to another, you may want to analyze what it would cost you to liquidate your holdings and open a new account instead. If you only have a few stocks in your account, and have losses in them, it may make sense to sell and close your account. Although this triggers a tax event, you can realize capital losses at tax time, and you can avoid high account transfer fees. However, this option may not be the best for you if you have a more complex portfolio. Additionally, if you have capital gains on the securities you own you may not want to sell due to tax liability reasons.
Below are a few items you should consider before transferring your account:
Investment options available: Investors should ensure that the online brokerage they want to transfer to offers the same investment options as the current brokerage. For example, some online brokerages do not offer mutual funds or penny stocks. These investments may need to be liquidated prior to an account transfer.
Account closing fee: Only two of the online brokerages in our study charge this fee: T. Rowe Price and e*Trade. They're in the minority though, since many more do not.
Account transfer fee reimbursement: Your new online brokerage might actually help ease the transition by comping or reimbursing your prior broker's fee. These can range from $25 - $150 depending on the provider. Currently, TradeKing offers the most generous promotion on reimbursing account transfers, up to $150. It's just one of the reasons why it's one of our favorite online brokers, especially for beginners. When looking to transfer an account to another brokerage, pay attention to reimbursement offers. Additionally, account transfer fee reimbursements may not be automatic, and investors may need to submit an application for reimbursement. Check with your individual online brokerages for the reimbursement policies before making the move.
Timing: Account transfers between online brokerages may take from 10 to 20 business days. Investors should take this time factor into account if planning to buy or sell shares relatively soon after the account transfer.
We’ve compiled the fees charged by 15 online brokerages for full or partial account transfers, ranked from lowest to highest fee charged for full account transfers. We’ve also included account transfer fee reimbursements currently offered for 2015. TradeKing, optionshouse, Scottrade, Firstrade, and SogoTrade are the only ones who have these promotions in place to lighten the burden of moving funds around.
|Account Closing Fee||ACAT Fee Charged||Partial ACAT Fee Charged||Account Transfer Reimbursement / Promotion|
|TradeKing||0.00||50.00||50.00||Refund up to $150|
|TIAA-CREF Self-Directed Brokerage||0.00||50.00||80.00||None|
|T. Rowe Price||50.00||50.00||50.00||None|
|optionshouse||0.00||75.00||25.00||Refund up to $100|
|Scottrade||0.00||75.00||75.00||Refund up to $100|
|Firstrade||0.00||75.00||25.00||Refund up to $100|
|SogoTrade||0.00||75.00||75.00||Refund up to $100|
*within 120 days of opening