What Is an In-Kind Transfer?

An in-kind transfer means that you can transfer your assets from one brokerage account to another brokerage account as is. This means that the assets in the two accounts are in completely different funds and stocks So you can transfer in one specific holding or multiple holdings in one account to another account where they will still be in those individual holdings (and they will most likely be in a slightly different stock).

Why Should I Do an In-Kind Transfer?

An in-kind transfer is in many cases the best way to move your assets.  Doing in-kind transfers saves money in account transfer fees, possible selling costs of stocks you are selling in one account before buying them in another account, and it also reduces overall risk by making sure that there are no trades in your name.  It is in many cases the optimal way of transferring assets from one brokerage account to another brokerage account.

What Types of Investments Can Be Transferred In-Kind?

The answer to this question typically depends on the rules set by the brokerage you plan to transfer assets to. Generally, you can complete in-kind transfers for individual and joint brokerage accounts, as well as individual retirement accounts (IRA) and custodial accounts held on behalf of minors. In terms of the actual investments that can be transferred in-kind, the list may include:

  • Stocks
  • Bonds
  • Mutual market capital funds
  • Exchange-traded funds (ETFs)
  • Money market funds
  • Certificates of deposit
  • Options
  • Unit investment trusts

The list of investments that may be excluded from in-kind transfers includes cryptocurrency and precious metals.  As you’re researching brokerages to open a new investment account, you should be looking at what assets you can move in-kind and which ones you may need to sell first.

How to Do an In-Kind Transfer?

To start doing in-kind transfers you first need to find a stock that you want to sell in your old brokerage account and then buy that same stock in your new brokerage account.  Then all you have to do is call your mutual fund company and ask them if they allow in-kind transfers.  If they do, you can then tell them what stock number in your new account that the shares in your old account will be transferred to.  You will need to know this beforehand so you can properly set up your new brokerage account to receive in-kind transfers from a mutual fund company.

Who Can Do an In-Kind Transfer? 

In order to do in-kind transfers, you need two things both brokerage accounts usually must have in common: they should be in the same account type and the same account provider.

The Same Account Type

For example, if one is a Roth IRA and the other is a Traditional IRA, in-kind transfers in general won’t work between these two accounts. They should both be in simple brokerage accounts in order for in-kind transfers to work. 

The Same Account Provider

For example, if your old brokerage account is with Fidelity and your new brokerage account is with Betterment in-kind transfers, in general, won’t work. When in-kind transfers are allowed in your account type in your old brokerage account and your new brokerage account, in-kind transfers are typically the best way of transferring assets. It saves you money in fees, reduces risk by making sure there are no active orders when you move your account, and in many cases, it’s the most tax-efficient way of doing transfers.

Benefits of In-Kind Transfer

There are several benefits to in-kind transfers like: 

  • No selling is necessary which can result in capital gains taxes if you sell the stock in your old brokerage account before buying them in your new brokerage account
  • You don’t have to pay transfer fees in both your old brokerage account and in your new brokerage account
  • The in-Kind transfers are typically tax-efficient so you don’t have to worry about capital gains taxes in either account or in future tax years
  • There are no fees in an in-kind transfer so if your old brokerage account has high annual fees it can be in your best interest in in-kind transfer out of that old brokerage account

Risks in In-Kind Transfer

There are some risks in in-kind transfers like: 

  • If you make a mistake in in-kind transfers, there can be significant losses in capital gains taxes 
  • You have to make sure the in-kind transfer goes smoothly and in some cases there is a waiting period before in-kind transfers go through 
  • In some cases if your new brokerage account doesn’t accept all the stocks in your old brokerage account in in-kind transfers, you may have to sell the stock in your old brokerage account and then buy of them in new brokerage account
  • In some cases if in-kind transfers go wrong, there can be high capital gains taxes involved

Key Takeaways

In-kind transfers refers to the transfer of one type of asset in an account in its current form into another account without selling and buying them in most cases for cost, fees, and tax benefits.  In order to do in-kind transfers, you need both brokerage accounts to be in the same investment platform through the same account provider in most cases.  In-kind transfers in general are the best way of transferring assets in between accounts in order to reduce fees and minimize taxes in most cases.  There are some risks in in-kind transfers like if you make a mistake in in-kind transfers, there can be significant losses in capital gains taxes and in some cases in-kind transfers go wrong, there can be high capital gains taxes involved.

In-Kind Transfer is the transfer of investment in one account in its current form into another account without selling the stock in the other account in most cases.
In order to do in-kind transfers, you need two things both brokerage accounts usually must have in common: they should be in the same account type and in the same platform in order to in-kind transfer between accounts.
In-kind transfers in general are a good way of transferring assets in order to save money in fees, reduce risk because there are no active orders when you do in-kind transfers and in many cases it's the most tax-efficient way in many cases.
In-kind transfers in general are best done in the beginning of the new year in order to reduce fees in your accounts in most cases.
There are several benefits in in-kind transfer, in general it is tax-efficient in most cases.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.