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Hello again and welcome back to the Millennial Revolution Investment Workshop! New readers, please click here to start from the beginning.
Today we will be initiating out transfer from TD Ameritrade to Vanguard.
If you don’t know what the Hell I’m talking about, read here to get the background story of why we have decided to end our endorsement of TD Ameritrade, and read here to understand why we believe Vanguard is the most worthy new home for our investment funds.
So the last time we revisited this topic, we wanted to transfer our funds out but we didn’t want to incur any fees. $75 to get access to our own money? Uh, no thank you.
So looking over TD Ameritrade’s fee schedule, we noticed that while full transfers cost $75, partial transfers were free. So we came up with the idea to transfer all our ETF units out as a partial transfer (while leaving whatever residual cash in the account) to get all that stuff out for free, and then when that’s done we do a cash withdrawal to a checking account using an ACH (Automated Clearing House) electronic transfer, also for free. Read here for an explanation including pretty graphs.
BUT, I didn’t want to advise everyone to do this until I knew for a fact that it worked, so I asked for a guinea pig to try it out (we’d do it ourselves but we’re not American citizens) and reader Alex graciously volunteered. We all owe her a HUGE high-five for doing this for us, and if we’re ever in her neck of the woods we are so taking her out for drinks 🙂
Anyway, I’m happy to report that Alex tried it, and it worked! She got all her money out, closed her TD Ameritrade account, and didn’t pay a dime in fees. That is fan-FUCKING-tastic.
So let’s do this thing!
First things first, we want to initiate a PARTIAL transfer of our ETFs, and we want to do it as an in-kind transfer, meaning the ETF units never get converted into cash. If we were to do that, that would trigger a taxable event because we’ve just realized capital gains. Worse still, we would have triggered short-term capital gains, which are taxed as ordinary income. We don’t want that.
So what do we do? Well first, we go to Vanguard.com, hover over “Investing” and then click “Account Transfers”
Click on the “Start Your Transfer Online” button on the right.
I’m going to assume you don’t already have a Vanguard account, in which case you would answer “No” to the following question. If you do, answer “Yes.” The screens may look slightly different from the ones I’m showing but hopefully it won’t be too bad.
Next, when they ask you where your assets are, check off “With your brokerage firm.” This will trigger an in-kind transfer rather than a cash transfer.
Make sure you have all the info (TD Ameritrade account numbers, etc.) that you’ll need and then click Continue.
Now you’ll have to type in your transfer details. For your Brokerage Firm, type “TD Ameritrade” (it should auto-complete as you do). Then enter your account number, the value of your holdings, and MOST IMPORTANTLY, ANSWER NO to the question “Are you transferring your entire account?” If you answer yes, you will invoke a FULL transfer rather than a PARTIAL transfer and then you just spent $75 for no reason.
When you’re asked to specify what assets to move, select ONLY “Stocks, bonds, ETFs, or brokerage CDs.” Leave “Cash/money market fund” UNCHECKED. This will ensure your cash stays in the TD Ameritrade account. For now.
Answer the next questions about margin debt and option contracts. For the record, the answer BETTER be no, or I’m gonna fly down there and smack you.
Next, you’ll have to give the specific details of each investment to transfer. Alex put in the full name of each ETF and that seemed to work, so do that. Obviously, substitute your actual account number, and select the “All” radio button for each ETF.
Note that if you don’t see this screen, you likely selected “Yes” to the question of “Are you transferring your entire account?” If this happens, go back and answer that question “No.”
Next, Vanguard will start creating your account. Obviously, if you already have a Vanguard account, you can skip this part, but for everyone else you’ll want to specify what kind of account you want. For our example, we want an Individual account, but feel free to do your own thing based on your own specific situation.
Next, select what you’d like to have done with your dividends or interests. I like it to be kept as cash myself so I can choose whether to reinvest it or take it as income, but it’s up to you.
Then, enter your personal information. I just made shit up.
Vanguard will ask you for employment details. I’ve been hankering to see Blade Runner 2049, so that may have influenced my answers…
You’re going to want to confirm that the name of your new account matches the name on your old TD Ameritrade account. In my case, I suspect it won’t…
Vanguard will produce a summary for you before you submit. MAKE SURE the transfer is listed as “Partial” rather than “Full.”
And next comes the snail-mail part. To push this transfer through, you have to print out and physically mail your documents to Vanguard. This is what caused this “Transfer-palooza” article to get delayed by 2 weeks, but on the plus side, that means this process only takes 2 weeks!
To not spook TD Ameritrade, I’d advise that you wait for your ETFs to get transferred out before your proceed to the next step. And that is, getting the rest of your cash out.
For the most part, your cash balance should be just spare change, but we’re not going to let TD Ameritrade take ANY of that spare change. After the shit they pulled, TD Ameritrade shouldn’t make a single goddamned dime off our readers.
To get that money out without incurring any fees, we’re going to initiate what’s called an ACH (Automated Clearing House) transfer. No, I don’t know why they named it something so stupid. Quit asking me questions.
To start, we’re going to want to log into you TD Ameritrade account, hover over “My Accounts”, then click on “Withdraw”
When it asks you what kind of transfer to do, pick ACH.
Fill in the details of the transfer you want to do…
And hit “Submit”
And You’re Done
That’s it! If everything went according to plan, you have now gotten ALL of your money out to Vanguard without paying a single dime in fees. Exit fees are the bane of my existence, and they should be yours too. NEVER reward a bank (or anyone else) for behaving like shit.
Your money is sacred. Protect it.
Once again, huge thanks to reader Alex for everything she’s done to help us test this transfer!
And with that, we are done for the week. Next week, we will wrap up this crazy year-long experiment known as the Investment Workshop, and we will be done for the year!
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