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Beware Broker Transfer Out Fees

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 [3] 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 [4]. 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 [5] 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:

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.