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Beware Broker Transfer Out Fees

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My wife’s Roth IRA currently sits at a TD Ameritrade account, where it’s been sitting for the last three or four years. With the majority of it in cash, mostly because we lost track of the account, we want to invest it in our retirement investment of choice, an index fund. Our index fund of choice happens to be the Vanguard 500 Index Fund because most of our retirement funds are with Vanguard. Vanguard does not have the cheapest index fund, I believe that title now resides with Fidelity’s Spartan 500 index. Paying the extra 0.08% seems reasonable considering we can manage it all in one place.

The only downside about this entire process is that TD Ameritrade has a $75 outbound full account transfer fee. :( Fortunately Vanguard does not charge you to transfer in an IRA (to my knowledge, no one does).

In comparing some of the common fees, $75 seems to be on the high side. $50 seems fairly standard with some brokers going as low as $30.

One thing to keep in mind, brokers may be willing to pay you to move your account. For example, TradeKing is willing to pay up to $150 if you transfer funds of more than $2,500. It won’t apply to us because the promotion is only for non-IRA accounts.

Broker Transfer Fees

Here’s a list of broker transfer fees, I use the brokers included on Smart Money’s 2009 Best Brokers list:

  • E*Trade: $60 ($25 for partial transfers)
  • Fidelity: $50
  • Charles Schwab: $50
  • TradeKing: $50
  • TD Ameritrade: $75 (free partial transfers)
  • Muriel Siebert: $50 (retirement accounts only)
  • Scottrade: $75
  • Firstrade: $50
  • OptionsXpress: $50
  • Banc of America: $75
  • Just2Trade: $75
  • WellsTrade: $75
  • Sharebuilder: $50
  • WallStreet*E: $150
  • Zecco Trading: $60
  • SogoTrade: $75

Here’s a vocabulary lesson, useful if you plan on transferring out your account. ACAT stands for Automated Customer Account Transfer and refers to an electronic request to transfer an entire brokerage account between FINRA and NYSE firms. It’s probably the easiest way to transfer your account from one broker to another and takes 7-12 business days.

The next time you are comparing brokers, one point of comparison you might want to consider is the transfer fees.

{ 28 comments, please add your thoughts now! }

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28 Responses to “Beware Broker Transfer Out Fees”

  1. Tracy says:

    And since you would be transferring an IRA account out via ACATs, don’t forget to see if they are going to also charge you an account termination fee on top of the ACAT charge.

  2. Hollis says:

    You say, “Fortunately Vanguard does not charge you to transfer in an IRA.” In all fairness, NOBODY charges you to transfer funds IN, but most of them “punish” you with the fee to transfer funds OUT (in a mostly futile effort to keep you in *their* house!)

    That said, there *may* be account set-up fees and annual fees that did not apply to your previous brokerage relationship. Caveat emptor!

    • Jim says:

      Yes that’s true, I didn’t meant to imply that Vanguard was special in that they didn’t charge a fee to transfer in, I was merely stating that because we were moving it to Vanguard and they didn’t.

      • Anonymous says:

        I just found this post because my request to transfer my IRA account from Vanguard to Etrade was rejected with Vanguard saying I must first pay a transfer out fee. So, I can tell you Jan 8 2011 that Vangaurd will charge you a transfer out fee and just generally make it difficult for you even after being with them for more than a decade.

  3. Kyle says:

    The rss feed article showed Scottrade with a $60 transfer, but it looks like you may have updated it to $0.

    Scottrade doesn’t charge to transfer out.

    • Jim says:

      Yep, I initially misread their schedule and just made the change. They listed in their free section, rather than in the regular fee schedule so I got tripped up and misinterpreted one of their listings.

  4. Ari says:

    How odd that you have to pay to transfer out of an IRA, whereas traditional brokerage accounts you generally don’t have to pay to close the account.

  5. Jim says:

    I did a similar transfer from ameritrade to vanguard earlier this year. Don’t waste your money on that transfer fee. You can do a 60-day rollover where you withdraw the money from one IRA and deposit it into a new one within 60 days with no penalty. Call the vanguard people, they are very helpful and will walk you through the whole thing.

  6. Don’t transfer the whole account.
    Leave $20 behind.

    Then you can eventually forfeit that $20 to Ameritrade.

    If you want to be really mean to them, leave only $1 behind

    Mark

  7. eric says:

    Yeah I remember reading about this transfer fee before. Luckily in my case my account was a regular TD one so I just withdrew the money in cash without having to worry.

  8. Rich says:

    Jim, Folks should know that the transfer you mentioned is a “custodial to custodial” transfer. It should always be used for “transfer outs” unless you specifically plan to take control of the money for some reason. If you choose to take control, taxes are deducted immediately so if you were planning on redepositing the funds within the 60 day window you would have to make up the deducted tax amount out of pocket to redeposit the same amount as was withdrawn. This can be substancial! You can apply for and receive a refund of the deducted taxes at year-end provided you stayed with-in the 60 day limit but at that point it is to late to include those funds in the redeposit. Depending on your age you may also be hit with a withdrawl penalty.

    • Jim says:

      Well, if someone is interested in transferring between the IRA’s like the original poster, you can tell Ameritrade not to withhold any of the money for tax purposes (because you are doing a 60-day rollover). And as long as you re-deposit the money into a new IRA within 60 days you don’t have to worry about paying any taxes or early withdrawal fees at all. That was confirmed to me by multiple Vanguard representatives before I made the transfer and it went off without a hitch. If people have questions they can call the brokerage and people will walk them through it.

  9. My Journey says:

    My Wife got hit with a $60 fee from Wachovia Securities for a Non-Qualified Account that wasn’t really active.

    Since I am Series 6 Registered I just moved it over my broker-dealer and got NAILED with a $75 account transfer fee!

    So angry

    • chuck says:

      Just got my statement in the mail from Ameritrade. $2 for the statement. Ripped me off. I am dumping them for Scottrade. No bogus FEES!

  10. Thanks for the heads up– they getyou coming and going!

  11. fedup says:

    I applied for level 3 stock options from Etrade but only got level 1. I do not plan on risky options trading. I just want to sell covered options to “get paid” to buy and sell stocks. I had options trading at Ameritrade and I have options trading at Zecco. Etrade must have stricter requirements for options trading. They told me I can reapply and change my application data but will not tell me what I needed in my application to get approved for full options trading. I want to move my IRA to another broker that will allow options trading. I plan to use Scott Trade to transfer out of Etrade. They will reimburse up to $100 of transfer out fees from the previous broker. Etrade will charge me $60. It does appear Scott trade will require a reimbursement form with attached proof of fees. I think it is worth the effort. I will get a custodian to custodian transfer that is not limited to the once a year restriction of a non-custodial transfer. If I do not like Scottrade I can transfer out of Scott Trade to any other broker without a fee.

    • R Shah says:

      Level 1 option is good for covered option.
      I have same level and had been trading covered calls for many years

  12. ticktrade says:

    @fedup, For immediate full options level approval, no questions asked, try thinkorswim. I too have an Etrade account but found the options approval process silly, as if they are protecting me from myself. Minimum funding on thinkorswim is $3500. You can immediately trade whatever type of options trades you like – calls, puts, spreads, condors, calendars, diagonals, you name it! Thinkorswim was just rated #1 overall online broker by Barron’s for second year in a row. No setup fees, no annual fees, but unlike Etrade they unfortunately do not pay interest on cash in a sweep account. I guess they want you to trade, not sit on cash. I sound like an ad, but just a happy customer.

  13. Mags says:

    How is the Transfer of a Brokerage account handled when it contains instruments purchased on “Margin” borrowing and is not settled. What are the options that are usually available? Is it possible that the receiving firm will pay-off the Margin amount owed? Appreciate any information on this. Thanks.

  14. P. Douglass says:

    Are these fees per position or for transferring an entire account? I am the executor for an estate where the stock positions are in a full svc broker. If the fee is per position, I might be better of keeping things where they are. Otherwise, I’ll transfer the 10-20 positions that I am liquidating and pay the set fee. The account is currently with MS-SB.

    ty

  15. Steve says:

    I just transferred securities from a Morgan Stanley Smith Barney account to Fidelity. MSSB charged a fee of $95. Considering that they were charging an annual fee of $75 to have an account, charge outrageous commissions and provide useless account reps I would advise anyone to steer clear of them.

    Fidelity charged no fees.

  16. robin says:

    @steve fidelity charges $50…any charge is ridiculous. They take a cut for the fund management during the life time of the account, in addition to commissions etc. $50 to CLOSE an account?? This is RIDICULOUS!!!

  17. Jeff Widman says:

    Can you update this post? Scottrade is now charging $75 for account transfer-outs.

    Super frustrating.

    • Jim says:

      Hi Jeff – I updated the post. Thanks!

    • JBT says:

      Yea, that is frustrating with Scottrade. The main reason why I selected Scottrade to park my Rollover IRA is the no ACAT out fee. I was going to transfer out to Wells Trade then the agent told me that they have changed their policy and have been charging $75 for a full ACAT out transfer since October 2012. WTF!

      Now I can only do partial transfer for free and have to leave $500 in cash or equity in the account. I never read in their policy that I have to leave a minimum of $500 in the account so I think that it’s something that the agent made up. I know you need to have $500 to open an account but there is no minimum balance to maintain. Scottrade will not let me do a partial transfer without meeting their $500 minimum. I only have $168 in cash and the rest are in stocks. I am transferring all stocks to Wells and leave the cash but I have to deposit $332 in the acccount to meet their threshold. Quite a hassle!

  18. mench says:

    I’m trying to figure out the best way to move my Roth account (15 stocks + cash) from TDAmeritrade to Vanguard. If I liquidate before direct rollover, I’ll have to pay $150 in commissions (for selling 15 stocks), plus possible closing fee. If I don’t liquidate in a direct rollover, Vanguard Brokerage will take it but then I’ll have to sell the same stocks (which I don’t intend to keep) for a higher comm. rate ($12?). So the math tells me that I’m better off liquidating before rollover.

    Or are there any other ways to make this transfer less costly? Please advise.

  19. Alexandra Day says:

    Citibank charges $75 to transfer all or part of an IRA account!

  20. David G says:

    I have an IRA account with Ameriprise Financial. I want to roll it into another IRA. I have a letter indicating a $100 charge for termination. I have had this account for 20 years. Are they kidding?


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