How to Transfer a Betterment to Charles Schwab and Vice Versa
If you’ve used Betterment’s robo service but now want to try self-directed trading, you can move your account to Charles Schwab. Schwab offers trading in many assets that Betterment doesn’t. If you’re at Schwab and want to try Betterment’s automated investing, you can move in that direction too. Here’s how:
Transferring from Betterment to Charles Schwab
The steps for transferring a Betterment account to Schwab depend on whether it’s an IRA or a taxable account.
IRA to IRA:
Betterment does not allow in-kind transfers for IRAs. An in-kind transfer moves shares without selling them, making it faster and easier.
If you want to move your Betterment IRA to Schwab, Betterment will sell all holdings and send a check to Schwab for the cash balance. But the process is a bit more detailed.
Log into your new Schwab IRA (make sure it’s the same type as your Betterment IRA) and request a
transfer. Go to the Move Money link at the top of the site. Click on Account Transfer to access Schwab’s transfer form.
You can use this e-form to request the transfer of your Betterment IRA. You’ll need your Betterment account number, which you will found on any statement.
After submitting the transfer request, Betterment will receive it from Schwab, and the process will start. If your Betterment IRA is worth more than $250,000, the transfer paperwork will need a medallion signature guarantee.
Betterment will send the cash proceeds directly to Schwab, so it’s not a 60-day rollover.
Open Charles Schwab Account
Open Schwab Account
Taxable Account Transfer:
For taxable accounts, Betterment allows in-kind transfers. Fractional shares will be converted to cash, and the account will be moved through the ACATS network. Betterment only performs full transfers, so partial transfer requests will be rejected.
The process is similar to an IRA transfer. Log into your Schwab account and click Move Money -> Account Transfer.
Search for Betterment in a box provided.
Betterment makes the process a bit harder by requiring a medallion signature guarantee for transfers over $250,000. Transfers below that need a notary stamp.
Alternative Method:
Due to Betterment’s strict transfer policies, it might be easier to withdraw cash from your account (taxable or IRA) and deposit it into your new Schwab account. Check with your tax advisor before choosing this method, as there may be tax implications.
Open Charles Schwab Account
Open Schwab Account
Transferring Charles Schwab Account to Betterment
First, open a Betterment account. You can get up to one year of free service if you use their promotion offer.
Betterment’s policies can make transfers difficult. To transfer a Schwab account into Betterment, first link your Schwab account to your Betterment account. Click on the Connect new button at the bottom of the Betterment website (after logging in).
You can link your Schwab account using login credentials (via Plaid) or account details.
Once your Schwab account is linked, request the transfer. Click on the Transfer or rollover button at the top of the Betterment site. Choose either taxable or non-taxable, select your Schwab account type, and follow the prompts. You can select a full or partial transfer of assets.
Remember, Betterment only allows trading in a limited selection of ETFs. This can make the transfer process harder, depending on your Schwab account holdings.
Cryptocurrencies cannot be moved through an ACATS transfer. Betterment doesn’t accept options. If stocks are transferred, Betterment will sell them immediately. Mutual funds and non-aligned ETFs will gradually be liquidated to buy more of Betterment’s selected ETFs.
How Much Does a Transfer Cost?
Schwab charges $75 for a full outgoing transfer. Partial transfers are free. Betterment charges nothing for either type of transfer, and neither broker charges for incoming transfers.
Getting the needed signatures for Betterment’s requirements could cost up to $100, but some banks may offer these services for free to their customers.
How Long Does a Transfer Take?
Schwab’s website states that a full incoming transfer takes 5-8 business days. This applies to taxable accounts with all paperwork correctly completed, including a notary stamp or medallion signature. Errors in paperwork can cause delays.
Since Betterment sends a check for IRA transfers, the process usually takes longer for IRAs.
Betterment estimates a turnaround time of about 5-6 business days for an incoming transfer. If either broker needs more information, the process could take longer.
Open Charles Schwab Account
Open Schwab Account
Updated on 9/18/2024.
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