Ways to avoid account transfer fees between brokerages?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
addicoe
Posts: 9
Joined: Sun Jul 28, 2019 6:15 pm

Ways to avoid account transfer fees between brokerages?

Post by addicoe » Sun Oct 27, 2019 6:42 pm

I want to move a roth IRA from one brokerage to another, but there is a fee involved. The only way I can think of to avoid the fee is to open a second roth IRA and only transfer part of the funds. Would that work?

User avatar
RickBoglehead
Posts: 5021
Joined: Wed Feb 14, 2018 9:10 am
Location: In a house

Re: Ways to avoid account transfer fees between brokerages?

Post by RickBoglehead » Sun Oct 27, 2019 6:43 pm

There should be no fee to transfer. Some brokerages charge a fee to close an account. Perhaps you could leave $1?
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

aristotelian
Posts: 6483
Joined: Wed Jan 11, 2017 8:05 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by aristotelian » Sun Oct 27, 2019 6:48 pm

addicoe wrote:
Sun Oct 27, 2019 6:42 pm
I want to move a roth IRA from one brokerage to another, but there is a fee involved. The only way I can think of to avoid the fee is to open a second roth IRA and only transfer part of the funds. Would that work?
Other alternative is leave a small amount of money behind in the original IRA, withdraw it, and then manually roll it in to your new IRA within 60 days. As long as you do it once per year you should be fine with the IRS and no fee for full account transfer.

aristotelian
Posts: 6483
Joined: Wed Jan 11, 2017 8:05 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by aristotelian » Sun Oct 27, 2019 6:50 pm

RickBoglehead wrote:
Sun Oct 27, 2019 6:43 pm
There should be no fee to transfer. Some brokerages charge a fee to close an account. Perhaps you could leave $1?
A lot of the brokers charge $50 or $75 for full account transfer.

sksbog
Posts: 309
Joined: Wed Jun 20, 2012 9:14 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by sksbog » Sun Oct 27, 2019 6:53 pm

Instead of pushing money out of your brokerage institution, try pulling from your destination institution. I have seen most institutions bear the cost of pulling inbound money and is free to us.

Good luck!

tibbitts
Posts: 9375
Joined: Tue Feb 27, 2007 6:50 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by tibbitts » Sun Oct 27, 2019 6:56 pm

addicoe wrote:
Sun Oct 27, 2019 6:42 pm
I want to move a roth IRA from one brokerage to another, but there is a fee involved. The only way I can think of to avoid the fee is to open a second roth IRA and only transfer part of the funds. Would that work?
Some brokerages like Vanguard will not reimburse fees, but how much are we talking about? $50? $75? This nonsense of keeping $1 in an account etc. for the next fifty years to avoid fees ... seriously? Just yet another annoyance for your beneficiaries to deal with.

illumination
Posts: 274
Joined: Tue Apr 02, 2019 6:13 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by illumination » Sun Oct 27, 2019 8:56 pm

I got hit with a $95 fee per account with Wells Fargo when I moved funds. I moved 3 account, so $285.

In hindsight, I should have left $1 in there just for spite. Ive done business there for decades also. Really soured me even further to where I plan to move it all out.

I personally think there should be some consumer protection laws for fees on closing an account in good standing.

jcar
Posts: 222
Joined: Fri Jul 03, 2015 9:41 pm
Location: NC

Re: Ways to avoid account transfer fees between brokerages?

Post by jcar » Sun Oct 27, 2019 9:29 pm

illumination wrote:
Sun Oct 27, 2019 8:56 pm
I got hit with a $95 fee per account with Wells Fargo when I moved funds. I moved 3 account, so $285.

In hindsight, I should have left $1 in there just for spite. Ive done business there for decades also. Really soured me even further to where I plan to move it all out.

I personally think there should be some consumer protection laws for fees on closing an account in good standing.
[/quote
I just made a move from Vanguard to ML. VG charged nothing though I believe ML would have reimbursed if they had charged.

illumination
Posts: 274
Joined: Tue Apr 02, 2019 6:13 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by illumination » Sun Oct 27, 2019 10:25 pm

[/quote
I just made a move from Vanguard to ML. VG charged nothing though I believe ML would have reimbursed if they had charged.
[/quote]

I got a nice bonus to move that exceeded the closing fee, I just thought it was REALLY bad business that they charged anything. Especially when it's more of a punitive fee than an actual closing cost. If they charged say $6 or something for a processing fee, fine, but just under a hundred dollars? Whatever math they did on that doesn't account for how many irate customers plan to tell everyone never to open a brokerage account with them.

Wells Fargo is one of those banks that deserves every bit of the outrage they get.

student
Posts: 4142
Joined: Fri Apr 03, 2015 6:58 am

Re: Ways to avoid account transfer fees between brokerages?

Post by student » Sun Oct 27, 2019 11:07 pm

illumination wrote:
Sun Oct 27, 2019 10:25 pm
I got a nice bonus to move that exceeded the closing fee, I just thought it was REALLY bad business that they charged anything. Especially when it's more of a punitive fee than an actual closing cost. If they charged say $6 or something for a processing fee, fine, but just under a hundred dollars? Whatever math they did on that doesn't account for how many irate customers plan to tell everyone never to open a brokerage account with them.

Wells Fargo is one of those banks that deserves every bit of the outrage they get.
My experience seems to be the following:
1) Firms, such as Vanguard, do not have closing fee but they do not give bonus for opening an account either.
2) Firms, such as Etrade, have closing fee but they give bonus for opening an account.

Seems fair to me. I am not familiar with Wells Fargo and do not know whether they give a bonus. So it may be particularly bad. Fidelity used to be in category 2 but it is now in category 1.
Last edited by student on Mon Oct 28, 2019 1:26 pm, edited 1 time in total.

tibbitts
Posts: 9375
Joined: Tue Feb 27, 2007 6:50 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by tibbitts » Sun Oct 27, 2019 11:17 pm

illumination wrote:
Sun Oct 27, 2019 8:56 pm
I got hit with a $95 fee per account with Wells Fargo when I moved funds. I moved 3 account, so $285.

In hindsight, I should have left $1 in there just for spite. Ive done business there for decades also. Really soured me even further to where I plan to move it all out.

I personally think there should be some consumer protection laws for fees on closing an account in good standing.
So you're going to leave it up to your beneficiaries to deal with three more accounts, even to save $285?

a_movable_life
Posts: 126
Joined: Tue Dec 20, 2016 9:33 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by a_movable_life » Sun Oct 27, 2019 11:25 pm

tibbitts wrote:
Sun Oct 27, 2019 11:17 pm
illumination wrote:
Sun Oct 27, 2019 8:56 pm
I got hit with a $95 fee per account with Wells Fargo when I moved funds. I moved 3 account, so $285.

In hindsight, I should have left $1 in there just for spite. Ive done business there for decades also. Really soured me even further to where I plan to move it all out.

I personally think there should be some consumer protection laws for fees on closing an account in good standing.
So you're going to leave it up to your beneficiaries to deal with three more accounts, even to save $285?
Don't most places have a threshold below where they close the account?

I've thought of doing this with Saturna, but what happens when they bill the 25$ "Inactivity fee" can they take me to collections for the 20 dollars?

aristotelian
Posts: 6483
Joined: Wed Jan 11, 2017 8:05 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by aristotelian » Sun Oct 27, 2019 11:43 pm

tibbitts wrote:
Sun Oct 27, 2019 11:17 pm
illumination wrote:
Sun Oct 27, 2019 8:56 pm
I got hit with a $95 fee per account with Wells Fargo when I moved funds. I moved 3 account, so $285.

In hindsight, I should have left $1 in there just for spite. Ive done business there for decades also. Really soured me even further to where I plan to move it all out.

I personally think there should be some consumer protection laws for fees on closing an account in good standing.
So you're going to leave it up to your beneficiaries to deal with three more accounts, even to save $285?
His beneficiaries will inherit $285 more. Not a bad bargain. They can let the $1 escheat to the state if they dont want to cash it out.

User avatar
goingup
Posts: 3681
Joined: Tue Jan 26, 2010 1:02 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by goingup » Mon Oct 28, 2019 10:20 am

I'd pay the closure fee and move on. I don't like loose ends and try to lead a tidy financial life. It's easier that way.

illumination
Posts: 274
Joined: Tue Apr 02, 2019 6:13 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by illumination » Mon Oct 28, 2019 10:24 am

tibbitts wrote:
Sun Oct 27, 2019 11:17 pm
illumination wrote:
Sun Oct 27, 2019 8:56 pm
I got hit with a $95 fee per account with Wells Fargo when I moved funds. I moved 3 account, so $285.

In hindsight, I should have left $1 in there just for spite. Ive done business there for decades also. Really soured me even further to where I plan to move it all out.

I personally think there should be some consumer protection laws for fees on closing an account in good standing.
So you're going to leave it up to your beneficiaries to deal with three more accounts, even to save $285?
Well first of all, I didn't do this, I said I wish I had just out of spite. :mrgreen:

But closure of an accounts like this (along with about 10 other accounts) represents about 5 minutes of extra work for my beneficiaries. I don't sit around worry about my kids having to close my PayPal or iTunes accounts either. And if they never get the $1 dollar I left in the Roth IRA account at Wells Fargo, oh well.

But $285 more compounded over a few decades in retirement accounts could easily be a few thousand when I die.

I get people leaving a dollar in there and maybe the bank closes it on their own and send you the dollar because it costs them more money to service it. A $95 closure fee is completely unreasonable. But I know now what to look for in the fine print, I just assumed the bank I had worked with decades would be reasonable on their brokerage.

GMT-8
Posts: 131
Joined: Fri Mar 26, 2010 5:11 pm

Re: Ways to avoid account transfer fees between brokerages?

Post by GMT-8 » Mon Oct 28, 2019 7:24 pm

My wife's father passed away recently with three accounts as you describe.

One just send us money immediately, one is still in progress ... and the third was Merrill.

They took several months to sell and send us money from his IRA account, after trying very hard to get us to keep it there. We said cash it out, withhold for tax, and send us the money. It was only about $6k. So we got the $6k but after a month or so they sent us a check for $ .08. Yes, 8¢. Because they didn't do the math properly the first time.

I hope the outstanding account doesn't play the same games.

Post Reply