Keeping tabs on multiple investment accounts can be a hassle. Moving all of your assets to one firm “seems like an easy process, but it depends on what assets you’re moving where and to what types of accounts” says Jason Butler, of T. Rowe Price Investment Services.
The firms try to make a transfer easy — you usually fill out a form and send a copy of your statement to the new broker. But first ask your current firm about potential tax consequences, transaction fees (including redemption fees) and transfer charges if you move your money. You can avoid most charges if you transfer assets “in kind” to your new account. But you may have to sell shares in a fund that the new firm doesn’t offer, which could trigger a commission or redemption fee. …
If you can, roll 401(k) funds directly into an IRA. Some plans will mail you a check payable to the new firm, however, and you’ll have to deposit it yourself. Done incorrectly, this could make you liable for income tax and a 10% penalty if you’re under age 59½.
When you shift assets, your old firm must forward the cost basis of your stocks to your new firm. The catch: This applies only to stocks bought on or after January 1, 2011; to funds, ETFs and dividend reinvestment plans bought on or after January 1, 2012; and to bonds bought on or after January 1, 2014.
Arie J. Korving, a CERTIFIED FINANCIAL PLANNER™ professional, has been delivering customized wealth management solutions to his clients for more than three decades. Prior to co-founding Korving & Company, he was First Vice President with UBS Wealth Management and held management positions with General Electric.