ACATS transfer -- cost basis on partial transfer

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SlowMovingInvestor
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ACATS transfer -- cost basis on partial transfer

Post by SlowMovingInvestor »

I'm thinking of doing a partial transfer of a position from one brokerage to another. The position is an ETF with multiple lots.

What lots will be transferred ? I don't really care which lots are transferred, I just want to ensure that cost basis transfers properly.
livesoft
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Re: ACATS transfer -- cost basis on partial transfer

Post by livesoft »

You need to specify the lots that you want transferred. I have done that without a problem. You would specify the lots "Versus Purchase" as in
"Please transfer in-kind the 120 shares purchased on March 8, 2009, the 89 shares purchased on December 24, 2018, the ...."
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Topic Author
SlowMovingInvestor
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Re: ACATS transfer -- cost basis on partial transfer

Post by SlowMovingInvestor »

livesoft wrote: Sat Aug 15, 2020 6:34 pm You need to specify the lots that you want transferred. I have done that without a problem. You would specify the lots "Versus Purchase" as in
"Please transfer in-kind the 120 shares purchased on March 8, 2009, the 89 shares purchased on December 24, 2018, the ...."
Thanks. In my old brokerage, non covered shares just show up as 01/01/1901. I suppose this is brokerage specific, but can I use that date (it has the optimal size lot I need to transfer).
livesoft
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Re: ACATS transfer -- cost basis on partial transfer

Post by livesoft »

SlowMovingInvestor wrote: Sat Aug 15, 2020 7:16 pm
livesoft wrote: Sat Aug 15, 2020 6:34 pm You need to specify the lots that you want transferred. I have done that without a problem. You would specify the lots "Versus Purchase" as in
"Please transfer in-kind the 120 shares purchased on March 8, 2009, the 89 shares purchased on December 24, 2018, the ...."
Thanks. In my old brokerage, non covered shares just show up as 01/01/1901. I suppose this is brokerage specific, but can I use that date (it has the optimal size lot I need to transfer).
That suggests that neither you nor the brokerage know the dates purchased and the cost basis. It would not be a bad idea to resolve this before you try to transfer. This is particular true for ETF shares because they generally cannot use Average Cost as a cost basis method. All my brokerages kept track of ETF share dates acquired and price paid forever, so there was no such thing as non-covered shares with my ETFs.

However, maybe these are not in a taxable account and it wouldn't matter at all. But in a taxable account, it would be a big deal to me. In a tax-advantaged account, then just moving the first in, first out would be fine I suppose.
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Topic Author
SlowMovingInvestor
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Re: ACATS transfer -- cost basis on partial transfer

Post by SlowMovingInvestor »

livesoft wrote: Sat Aug 15, 2020 7:20 pm
SlowMovingInvestor wrote: Sat Aug 15, 2020 7:16 pm
Thanks. In my old brokerage, non covered shares just show up as 01/01/1901. I suppose this is brokerage specific, but can I use that date (it has the optimal size lot I need to transfer).
That suggests that neither you nor the brokerage know the dates purchased and the cost basis. It would not be a bad idea to resolve this before you try to transfer. This is particular true for ETF shares because they generally cannot use Average Cost as a cost basis method. All my brokerages kept track of ETF share dates acquired and price paid forever, so there was no such thing as non-covered shares with my ETFs.
This is orthogonal to my original question, but is an interesting point. These ETF shares were converted from one of Vanguard's mutual funds and then transferred out of VG years ago. VG only had average cost basis for the mutual fund's old lots, so it converted those to ETFs with an average cost basis. Later purchases are specific cost id. Independent of the transfer question I asked, I presume this is an OK method of handling cost basis ?
livesoft
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Re: ACATS transfer -- cost basis on partial transfer

Post by livesoft »

SlowMovingInvestor wrote: Sun Aug 16, 2020 5:43 am.... VG only had average cost basis for the mutual fund's old lots, so it converted those to ETFs with an average cost basis. Later purchases are specific cost id. Independent of the transfer question I asked, I presume this is an OK method of handling cost basis ?
Yes, I think so.
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MikeG62
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Re: ACATS transfer -- cost basis on partial transfer

Post by MikeG62 »

SlowMovingInvestor wrote: Sat Aug 15, 2020 5:02 pm I'm thinking of doing a partial transfer of a position from one brokerage to another. The position is an ETF with multiple lots.

What lots will be transferred ? I don't really care which lots are transferred, I just want to ensure that cost basis transfers properly.
I’ve done this several times now and they source broker selected the lots to transfer. Cost basis always transferred correctly.
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Topic Author
SlowMovingInvestor
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Re: ACATS transfer -- cost basis on partial transfer

Post by SlowMovingInvestor »

MikeG62 wrote: Sun Aug 16, 2020 10:45 am
SlowMovingInvestor wrote: Sat Aug 15, 2020 5:02 pm I'm thinking of doing a partial transfer of a position from one brokerage to another. The position is an ETF with multiple lots.

What lots will be transferred ? I don't really care which lots are transferred, I just want to ensure that cost basis transfers properly.
I’ve done this several times now and they source broker selected the lots to transfer. Cost basis always transferred correctly.
Did they just pick randomly or where you able to talk to the source broker and let them know what you want transferred ?

For some more information, Interactive Brokers is the receiving broker. When I try to initiate the transfer on IB's site, I can only specify number of shares, nothing else. Fido is the source broker
BuddyJet
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Re: ACATS transfer -- cost basis on partial transfer

Post by BuddyJet »

Don’t know if this is the best way but my approach was to open a new (temp) account at the “old” broker, transfer the tax lots I wanted to move to the temp account at the old broker , checked that all basis info was correct and printed basis info, then moved the whole temp account to new broker.

It is a bit more work but it makes it hard for things to go wrong. Transfer Can’t take wrong lots, can’t make a full rather than partial transfer, and I have proof of basis for transferred stocks.

My old broker was Fidelity but this approach should work with any broker.

Possible downside is that some brokers will charge a full account transfer fee.
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Topic Author
SlowMovingInvestor
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Re: ACATS transfer -- cost basis on partial transfer

Post by SlowMovingInvestor »

BuddyJet wrote: Mon Aug 17, 2020 9:25 pm Don’t know if this is the best way but my approach was to open a new (temp) account at the “old” broker, transfer the tax lots I wanted to move to the temp account at the old broker , checked that all basis info was correct and printed basis info, then moved the whole temp account to new broker.

It is a bit more work but it makes it hard for things to go wrong. Transfer Can’t take wrong lots, can’t make a full rather than partial transfer, and I have proof of basis for transferred stocks.

My old broker was Fidelity but this approach should work with any broker.

Possible downside is that some brokers will charge a full account transfer fee.
That is an excellent idea. My only concern is that sometimes the destination broker wants an account statement or the like, and that means I would have to wait till the end of the month to get it.
BuddyJet
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Re: ACATS transfer -- cost basis on partial transfer

Post by BuddyJet »

SlowMovingInvestor wrote: Mon Aug 17, 2020 9:53 pm
BuddyJet wrote: Mon Aug 17, 2020 9:25 pm Don’t know if this is the best way but my approach was to open a new (temp) account at the “old” broker, transfer the tax lots I wanted to move to the temp account at the old broker , checked that all basis info was correct and printed basis info, then moved the whole temp account to new broker.

It is a bit more work but it makes it hard for things to go wrong. Transfer Can’t take wrong lots, can’t make a full rather than partial transfer, and I have proof of basis for transferred stocks.

My old broker was Fidelity but this approach should work with any broker.

Possible downside is that some brokers will charge a full account transfer fee.
That is an excellent idea. My only concern is that sometimes the destination broker wants an account statement or the like, and that means I would have to wait till the end of the month to get it.
Rather than a month end statement, I sent a printout of the account holdings. It has the account name, account number, and all stock info for them to verify transfer info.

I’ve made transfers this way four times to earn new account bonuses and never had an issue but have not transferred to IB.
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MikeG62
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Re: ACATS transfer -- cost basis on partial transfer

Post by MikeG62 »

SlowMovingInvestor wrote: Mon Aug 17, 2020 8:36 pm
MikeG62 wrote: Sun Aug 16, 2020 10:45 am
SlowMovingInvestor wrote: Sat Aug 15, 2020 5:02 pm I'm thinking of doing a partial transfer of a position from one brokerage to another. The position is an ETF with multiple lots.

What lots will be transferred ? I don't really care which lots are transferred, I just want to ensure that cost basis transfers properly.
I’ve done this several times now and they source broker selected the lots to transfer. Cost basis always transferred correctly.
Did they just pick randomly or where you able to talk to the source broker and let them know what you want transferred ?

For some more information, Interactive Brokers is the receiving broker. When I try to initiate the transfer on IB's site, I can only specify number of shares, nothing else. Fido is the source broker
They selected the lots. Like you, there was no option to select specific lots.

Personally, I did not really care which lots they choose as the transfer was intended only to take advantage of a transfer bonus. My plans were/are to transfer the funds back to Fidelity once the holding period completed and the bonus posted. No plans to sell the transferred share while at the new broker.

If it's somehow important to you, I suppose you could call IB and/or Fidelity and ask if there is a way that specific lots can be selected.

I've done this four times with Merrill Edge (three times for a CMA account and once for an IRA) and once with JPM. The transfers to ME were from Fidelity. The transfer to JPM was from ME. In every case, the cost basis for each lot transferred with no issues. I did take screen shots of the positions immediately before the transfers (from the source brokers website) to make sure I knew what the cost basis of each lot was (in the event any issues were to arise). I've read here on the forum that others had issues with cost basis transferring correctly. Thankfully I had no such issues.
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MikeG62
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Re: ACATS transfer -- cost basis on partial transfer

Post by MikeG62 »

SlowMovingInvestor wrote: Mon Aug 17, 2020 9:53 pm
BuddyJet wrote: Mon Aug 17, 2020 9:25 pm Don’t know if this is the best way but my approach was to open a new (temp) account at the “old” broker, transfer the tax lots I wanted to move to the temp account at the old broker , checked that all basis info was correct and printed basis info, then moved the whole temp account to new broker.

It is a bit more work but it makes it hard for things to go wrong. Transfer Can’t take wrong lots, can’t make a full rather than partial transfer, and I have proof of basis for transferred stocks.

My old broker was Fidelity but this approach should work with any broker.

Possible downside is that some brokers will charge a full account transfer fee.
That is an excellent idea. My only concern is that sometimes the destination broker wants an account statement or the like, and that means I would have to wait till the end of the month to get it.
That's a good point. In my case, Merrill Edge did not require any account statement from Fidelity. However, JPM did want an account statement. They would not accept a screenshot and I was told if I redacted "any information" from the statement it would not be accepted. Did not have to be the most current statement, just a statement to see it was actually me on the other side of the transaction.
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BlackcatCA
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Re: ACATS transfer -- cost basis on partial transfer

Post by BlackcatCA »

SlowMovingInvestor wrote: Mon Aug 17, 2020 8:36 pm
MikeG62 wrote: Sun Aug 16, 2020 10:45 am
SlowMovingInvestor wrote: Sat Aug 15, 2020 5:02 pm I'm thinking of doing a partial transfer of a position from one brokerage to another. The position is an ETF with multiple lots.

What lots will be transferred ? I don't really care which lots are transferred, I just want to ensure that cost basis transfers properly.
I’ve done this several times now and they source broker selected the lots to transfer. Cost basis always transferred correctly.
Did they just pick randomly or where you able to talk to the source broker and let them know what you want transferred ?

For some more information, Interactive Brokers is the receiving broker. When I try to initiate the transfer on IB's site, I can only specify number of shares, nothing else. Fido is the source broker
I have done in-kind transfer from Fidelity out. They do FIFO (told by broker there), so they will transfer the oldest lot first. That suited me fine. So I dont know if you can pick 2 lots in the middle but not the oldest, but you can call to ask.
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