Moving your investments from one brokerage to another can often trigger a steep fee, known as the ACAT (Automated Customer Account Transfer) fee, which typically costs anywhere from $50 to $100. This charge is levied by the outgoing broker (the one you are leaving) to process and send your assets.
The good news is that with the right strategy, you can almost always avoid paying this fee. Your method depends on whether you are moving assets "in-kind" (keeping them as stocks/ETFs) or moving cash.
The ACAT Fee Avoidance Strategy (The Best Path)
The most popular and efficient way to avoid the fee is to make the receiving broker cover the cost for you.
1. Get the New Broker to Pay
Nearly all major brokerages want your business and are willing to reimburse the ACAT fee, especially if you bring a substantial balance.
- The Minimum Balance: Most brokers (like Fidelity, Schwab, E*Trade, etc.) require a minimum transfer size for reimbursement, often $2,500 to $5,000. If your account balance meets this minimum, the new broker will automatically credit your account for the amount of the fee once the transfer is complete.
- Action Plan: When you initiate the transfer request at the new broker, look for a prompt asking if you incurred a transfer fee. You will often need to upload a copy of your old broker's final statement showing the fee being charged.
2. Move Assets "In-Kind"
This is the preferred method for taxable brokerage accounts. You keep your investments exactly as they are (stocks stay as stocks, mutual funds stay as mutual funds) and move them directly to the new broker.
- Tax Benefit: Moving assets "in-kind" is not a taxable event. You avoid triggering any capital gains or losses. Your old cost basis is maintained, which is essential for future tax calculations.
The Liquidation Strategy (The Cash-Out Path)
If your account balance is too small to qualify for fee reimbursement (under $2,500 to $5,000), the cheapest solution is to sell everything and transfer the cash.
1. The Strategy
- Liquidate: Sell all your stocks, ETFs, and mutual funds into cash within the old brokerage account.
- Withdraw: Initiate a standard ACH transfer to move the cash balance to your bank account or directly to your new brokerage account.
- Close: Once the balance is zero, the old broker will close the account without charging an ACAT fee.
2. The Critical Tax Warning
The tax consequences of liquidating assets depend on the account type:
| Account Type | Taxable Event? | Result |
| IRA / Roth IRA / 401(k) | NO | You can sell everything to cash, transfer the cash to the new retirement account (an IRA-to-IRA transfer), and suffer zero tax consequences or penalties. |
| Taxable Brokerage | YES | Selling appreciated assets will immediately trigger capital gains tax on all profits for the current tax year. The fee savings may not be worth the immediate tax bill. |
Two Paths to Zero Fees
To successfully close your old account without paying the transfer fee:
- If your balance is over $5,000: Always choose the ACAT Transfer method and request reimbursement from your new broker. This avoids taxes and costs.
- If your balance is small and in an IRA/Roth: Liquidate the assets to cash and perform a cash transfer to avoid the ACAT fee entirely.
- If your balance is small and in a taxable account: You must weigh the $50-$100 ACAT fee against the capital gains tax you would owe from liquidating your entire portfolio.
