Merrill Edge: transfer shares to new account, how are tax lots handled?

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Topic Author
need403bhelp
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Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

Thanks for everyone's past help.

I'm thinking of taking advantage of Public's brokerage bonus. We have a joint taxable account which they don't support. They also don't support SpecID cost basis method in their app. I'd like to transfer shares from a single tax lot at Merrill Edge from our joint account to my individual account, then ACAT to Public. Merrill Edge, however, only allows to specify how many shares to transfer, but doesn't tell me how they decide which ones. Anyone with experience doing this and know what method they use to decide which shares to transfer? Thank you.
sycamore
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by sycamore »

I don't know for certain (never had to do it) but perhaps it's oldest shares first (FIFO)?

I seem to recall this question being asked in another thread but don't remember which. Maybe you can find it with a search.
Topic Author
need403bhelp
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

sycamore wrote: Sat Sep 17, 2022 4:16 pm I don't know for certain (never had to do it) but perhaps it's oldest shares first (FIFO)?

I seem to recall this question being asked in another thread but don't remember which. Maybe you can find it with a search.
Thanks. I think I’m just going to try moving a single share and see what happens.
livesoft
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by livesoft »

Typically, one sends a "Letter of Instruction" that specifically identifies the shares to transfer. If the brokerage ignores the LoI, then they will probably get into trouble with the SEC. I suppose they could simply refuse to transfer and shares, but they would have to do that. I would not use an "app" or a mouse click to replace a specific Letter of Instruction if I wanted things done correctly. I know that a real brokerage like TDAmeritrade has performed flawlessly whenever I have sent a written communication through their private messaging system.
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Topic Author
need403bhelp
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

livesoft wrote: Sat Sep 17, 2022 5:06 pm Typically, one sends a "Letter of Instruction" that specifically identifies the shares to transfer. If the brokerage ignores the LoI, then they will probably get into trouble with the SEC. I suppose they could simply refuse to transfer and shares, but they would have to do that. I would not use an "app" or a mouse click to replace a specific Letter of Instruction if I wanted things done correctly. I know that a real brokerage like TDAmeritrade has performed flawlessly whenever I have sent a written communication through their private messaging system.
I see, thank you so much.

To clarify, I am asking about an internal transfer between two accounts at Merrill Edge. There are only 3 tax lots and 2 are identical for tax purposes (same date and price), plus I could always just transfer the shares back if the wrong ones are transferred, so I’ll probably try using the website first to transfer one share to see what happens. If I can’t figure it out I might try a letter of instruction although I imagine would take time for them to process etc (weeks?)
livesoft
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by livesoft »

I cannot speak about Merrill Edge, but TDAmeritrade has followed Letter of Instructions within minutes or at the latest that day.
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need403bhelp
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

livesoft wrote: Sat Sep 17, 2022 6:30 pm I cannot speak about Merrill Edge, but TDAmeritrade has followed Letter of Instructions within minutes or at the latest that day.
I see. Thank you for sharing your experience re timing of letter of instructions at TD Ameritrade.
Topic Author
need403bhelp
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

To update, single share has moved and appears to have been from oldest tax lot. So looks like oldest tax lot moves first.
Topic Author
need403bhelp
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

Also, looks like moving a single share first created a new tax lot. Oh well.
sycamore
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by sycamore »

need403bhelp wrote: Thu Sep 22, 2022 10:27 am Also, looks like moving a single share first created a new tax lot. Oh well.
Curious, in what way is it a new lot?

In the lot at ME, is the purchase info (date & price) different from the original lot info at Vanguard?
Topic Author
need403bhelp
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Re: Merrill Edge: transfer shares to new account, how are tax lots handled?

Post by need403bhelp »

sycamore wrote: Thu Sep 22, 2022 4:41 pm
need403bhelp wrote: Thu Sep 22, 2022 10:27 am Also, looks like moving a single share first created a new tax lot. Oh well.
Curious, in what way is it a new lot?

In the lot at ME, is the purchase info (date & price) different from the original lot info at Vanguard?
It shows as a new lot when I transferred more shares.

I had 2 lots before same purchase date and price (not sure why but that is how at vanguard also) and now I have 3.
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