Seeking Advice on Transferring out of Betterment

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Name=Random
Posts: 42
Joined: Sun May 21, 2017 2:58 pm

Seeking Advice on Transferring out of Betterment

Post by Name=Random »

I've decided to get my taxable portfolio out of Betterment and to a brokerage where I can manage it myself. I'm considering Vanguard for the brokerage, but am open to other suggestions. I've never transferred accounts between brokerages (if you want to call Betterment a brokerage). I'm looking for any general advice on what I should watch out for, especially from anyone who has experience with transferring out of Betterment. Once transferred to a new brokerage I plan to go the route of a simple 3 or 4 fund portfolio.

In particular, I'm concerned with the cost basis information getting transferred properly. Since I first started investing 2 years ago, I've been rolling in cash into Betterment at a rate of once a week which has led to a lot of tax lots in my current portfolio. When I asked betterment they responded that they will provide me, rather than the new brokerage, with cost basis information after the transfer takes place. When I called up Vanguard they told me that if they don't get the cost basis info as part of the transfer that I can fax that info to them. I'm not a fan of manual information transfer and data entry and concerned about possible mistakes in the process.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Seeking Advice on Transferring out of Betterment

Post by PFInterest »

Betterment will send the info to Vanguard or wherever. It's not an issue. You didn't mention taxes, which could be.
Outafter20
Posts: 167
Joined: Tue Oct 18, 2016 1:44 pm
Location: New York for now.

Re: Seeking Advice on Transferring out of Betterment

Post by Outafter20 »

Name=Random wrote:In particular, I'm concerned with the cost basis information getting transferred properly. Since I first started investing 2 years ago, I've been rolling in cash into Betterment at a rate of once a week which has led to a lot of tax lots in my current portfolio. When I asked betterment they responded that they will provide me, rather than the new brokerage, with cost basis information after the transfer takes place. When I called up Vanguard they told me that if they don't get the cost basis info as part of the transfer that I can fax that info to them. I'm not a fan of manual information transfer and data entry and concerned about possible mistakes in the process.
If I am not mistaken, the cost basis should be two lines: one for long term gains (or losses) and one for short term gains (or losses), no matter how many tax lot purchases there are. On the Schedule D on your federal return, you enter "various" on the dates purchased for long term gains, and the same for short term gains. It only becomes an issue when you sell specific lots.
livesoft
Posts: 74551
Joined: Thu Mar 01, 2007 8:00 pm

Re: Seeking Advice on Transferring out of Betterment

Post by livesoft »

Outafter20 wrote:If I am not mistaken, the cost basis should be two lines: one for long term gains (or losses) and one for short term gains (or losses), no matter how many tax lot purchases there are. On the Schedule D on your federal return, you enter "various" on the dates purchased for long term gains, and the same for short term gains. It only becomes an issue when you sell specific lots.
One still needs to figure out the actual amount for the gain/loss. Betterment uses ETFs, so even if one didn't use Specific Identification, the shares sold will have their own cost basis and thus their own gain/loss. Yes, one can sum up all the gain/loss and aggregate with "Various" even if one sells only some of the shares.

If I was going to get out of Betterment and I was going to sell all the investments, then I would sell before leaving Betterment and transfer cash. That way, Betterment is responsible for the 1099-B on the "covered shares" although I would check their numbers myself. And all the shares should be covered. Does Betterment charge for selling everything to go to cash? I would not think so, but I don't know.

And does a Betterment 1099-B import into tax software accurately and without problems?
Wiki This signature message sponsored by sscritic: Learn to fish.
ff4930
Posts: 114
Joined: Fri Dec 30, 2016 3:33 pm

Re: Seeking Advice on Transferring out of Betterment

Post by ff4930 »

I recently transferred out of Betterment to Vanguard not long ago. I however only had a few hundred in taxable so it wasn't much painful for me. You can either request a transfer in kind or liquidate from the transfer form from Vanguard.

Vanguard do not require medallion signature for transfer under a certain amount which is good. I would check out their FAQ for the specific amount.

Overall the transfer process took about 3 weeks.
User avatar
Bogle_Feet
Posts: 826
Joined: Tue Jan 14, 2014 6:56 pm

Re: Seeking Advice on Transferring out of Betterment

Post by Bogle_Feet »

Name=Random wrote:I'm considering Vanguard for the brokerage, but am open to other suggestions
E Trade or AmeriTrade. No asset management fees. Just pure DIY deep discount brokerages.
Topic Author
Name=Random
Posts: 42
Joined: Sun May 21, 2017 2:58 pm

Re: Seeking Advice on Transferring out of Betterment

Post by Name=Random »

livesoft wrote:If I was going to get out of Betterment and I was going to sell all the investments, then I would sell before leaving Betterment and transfer cash.

I am not planning to sell everything and turn it into cash right now, because I would incur capital gains. My plan is to transfer the securities over to the new brokerage without selling them. I'll have to figure out a longer term plan to turn my portfolio into a 3 or 4 fund portfolio. I created a separate post to ask for advice on that plan here viewtopic.php?f=1&t=219435

I'd also like to use the Specific Identification method for any future sales for tax loss harvesting, so I want that information to transfer properly to the new brokerage, not to mention any mistakes could turn into extra taxes for me.

My related question is: if I do go with Vanguard as my brokerage, will I manually be able to check the cost basis for all tax lots after the transfer and verify that it matches whatever report betterment provides me with? This sounds like it may be a pain, given that I may have around a thousand lots in my portfolio, but maybe it won't be bad. I am pretty handy with excel. I'm assuming the data from Vanguard can be downloaded in some form that i can import into Excel.

For anyone reading this in a similar situation to me here is a link to some basic info on how to get your account transferred from betterment. https://support.betterment.com/customer ... etterment-
themarsean
Posts: 1
Joined: Wed Jan 17, 2018 8:00 pm

Re: Seeking Advice on Transferring out of Betterment

Post by themarsean »

I am documenting the process and timeline for my transfer out of betterment on my blog. I couldn't find the information anywhere.

Here it is. Hope it's helpful!

https://themarsean.com/2018/01/transfer ... etterment/
financeforthefamily
Posts: 8
Joined: Thu May 03, 2018 8:44 am
Contact:

Re: Seeking Advice on Transferring out of Betterment

Post by financeforthefamily »

I have about a quarter million in Betterment that I’m transferring out in-kind to Fidelity. I just submitted the paperwork. I’m really interested in when the cost-basis information comes through since my intent is to transfer the securitites into my Fidelity DAF. Sounds like it take a month for the cost-basis info to show up at the brokerage...not horrible. Hopefully it will be a seamless experience.
financeforthefamily
Posts: 8
Joined: Thu May 03, 2018 8:44 am
Contact:

Re: Seeking Advice on Transferring out of Betterment

Post by financeforthefamily »

financeforthefamily wrote: Tue May 22, 2018 7:41 am I have about a quarter million in Betterment that I’m transferring out in-kind to Fidelity. I just submitted the paperwork. I’m really interested in when the cost-basis information comes through since my intent is to transfer the securitites into my Fidelity DAF. Sounds like it take a month for the cost-basis info to show up at the brokerage...not horrible. Hopefully it will be a seamless experience.
I'm doing the same thing. I have a quarter million transferring to Fidelity to transfer to DAF. Did your cost basis come through?
Post Reply