Strategies to Avoid the ACAT Fee from Robinhood when Moving Stocks or ETFs

Transferring stocks or ETFs from Robinhood to another brokerage can sometimes involve an automated customer account transfer (ACAT) fee, often referred to as the ACAT fee. This fee can be a significant expense, especially for large-scale transfers. However, there are several strategies you can employ to potentially avoid or minimize this fee.

1. Check for Promotions

Many brokerages offer promotional deals that cover transfer fees. Before initiating the transfer, it is worth checking if the new brokerage has any such promotions that can reimburse the ACAT fee. These promotions are a great way to offset the cost and make the transfer more economical.

2. Transfer Only Cash or Positions

If you only need to transfer cash and not the securities, you might be able to avoid the ACAT fee. However, if you are transferring stocks or ETFs, this fee is typically unavoidable. It's always a good idea to clarify with the receiving brokerage to confirm the specifics of this process.

3. Partial Transfers

If a full transfer is not necessary, consider transferring only specific assets. This approach can reduce the overall fee, but you should be aware that even partial transfers may still incur costs. Carefully evaluate which assets to transfer to maximize the benefits while minimizing fees.

4. Account Type and Terms

Your current Robinhood account type (such as Robinhood Gold) may have specific terms regarding fees. Some account types may offer different fee structures, so it is crucial to review the details provided by both your current and potential new brokerage to find the best option.

5. Timing Your Transfer

If you can, it might be beneficial to time your transfer during a promotional period when the receiving brokerage offers to cover transfer fees. This strategy can help reduce your overall costs and make the move more financially advantageous.

Contacting Customer Support

Reaching out to Robinhood's customer support is another good option. They may have additional guidance or specific methods to help you minimize or avoid the ACAT fee. Customer support can often provide personalized advice based on your unique situation.

While these strategies can help you avoid or reduce the ACAT fee, you should also consider the following:

Selling everything and asking for a check can be a viable option but comes with the drawback of immediate tax implications on any realized profits. If you have net losses, you cannot immediately buy the same stocks back for 30 days or it could be deemed a sham transaction by the IRS.

Transferring shares via DTC can be error-prone, even for experienced financial personnel. Robinhood, being known for its automation, may not offer this service.

Another option is to have your new brokerage agree to reimburse the transfer costs at the time you open your new account. While the new firm may not always agree, it's worth asking. This could simplify the process and reduce overall costs.

Ultimately, fully understanding the terms and conditions of both your current and potential new brokerage is essential to make informed decisions about your financial moves.