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"Transferring" Assetts (Treasuries, Etfs) From Schwab Brokerage To Fidelity Brokerage

Ltssharon
  |     |   471 posts since 2020

Has anyone tried to "transfer without any penalty or cost, fees, etc." assetts from Schwab to Fidelity, leaving those assetts (brokered cds, treasuries, ETFs), intact with no losses?

An advisor at Fidelity said it is easily done. Then again, I prefer to confirm, by listeong n to the voice of experience on this site.

I am approaching sipc limit at Schwab and want to investigate this suggested option.

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Answers
NFO
  |     |   66 posts since 2022
If you want to move to Fidelity because that better suits your investment needs, then go for it. However, having more than the SIPC limit ($500K) isn't a reason to move assets around.

For example, the assets of a brokered CD aren't held by the brokerage, but by the bank that issued the CD. All the brokerage is doing is distributing interest payments and recovering the principal back to your cash account at the end of the term. With securities such as stocks, mutual funds, and bonds, they're the custodian, but those types of things don't vanish even if the brokerage collapses. In fact, the brokerage is prohibited by law from co-mingling brokerage and investor assets. I guarantee you that there are many, many people who have well over the SIPC limit at Schwab and other brokerages and don't lose a moment's sleep about it.
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Infinityy
  |     |   107 posts since 2020
You shouldn't have any problems initiating an in-kind transfer, although I would save your own cost basis records in case those don't get moved over properly. I think Schwab charges $50 for a partial transfer, which Fidelity will typically reimburse if you ask.

That being said, Schwab maintains an excess-of-SIPC private insurance policy that can pay up to $150 million to a single client. I don't think SIPC insurance is a good reason to move to Fidelity
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Ltssharon
  |     |   471 posts since 2020
Thank you for the valuable insights. Yes, schwab tells me they have lloyds of london, I think it is. I just can't ever imagine dealing with 2 insurance companies in case of a failure. I would never have thought about the cost basis records without your input. Thank you.
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txFish1
  |     |   476 posts since 2023
Not from Schwab but I did a Transfer of Assets from E-Trade to Fidelity about 10 years ago and it was seamless. I had sold all of my mutual funds so I just transferred cash, Treasuries and a couple of broker CD's but it was very simple and the TOA was completed in 4 days and as Infinityy said above Fidelity reimbursed me for the small fee E Trade charged. The cost basis and price of the securities was priced correctly after the transfer
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CuriousDave
  |     |   233 posts since 2018
Unless these assets are held in an IRA account and the assets are either rolled over in kind or transferred by trustee-to-trustee transfer, the transfer of assets to another broker will be treated for tax purposes as a sale of those assets via one broker followed by a purchase of assets via another broker. If any of those assets have appreciated in value since date of acquisition (in your case, maybe the brokered CDs and Treasurys?), the capital appreciation will be taxable, and their appreciated values will become the tax bases in the Fidelity account going forward. Similarly, accumulated losses on any of these assets would be capital losses for tax purposes. You may want to ask Schwab to confirm whether or not it will report such gains and/or losses on Form 1099-B in January 2024.
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CTM
  |     |   179 posts since 2010
The provided answer is flat out incorrect!

Using the Automated Customer Account Transfer Service (an ACAT transfer), the basis of all securities will move to the new broker. Some securities, including proprietary mutual funds, cannot be transferred.

Some brokers, like TD Ameritrade, will report a report a sale with a $ 0.00 gain on the transfer.

I agree with NFO and wouldn't consider moving assets between brokers because of the SIPC limit.
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Ltssharon
  |     |   471 posts since 2020
Ctm, thank you for your reply to curiousdave, This information is also very helpful. Interestingly, I get the same sort of two different pieces of information when I call multiple agents at schwab and fidelity. I better leave well enough alone. Thanks for the information, and also the secondary lesson. Four heads are better than one, regarding this topic.
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Ltssharon
  |     |   471 posts since 2020
Curious Dave,
Taxes on any capital gain would for sure be unwelcome. Thank you for your precaution.
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