After looking around at the various expense ratios and services that exist, I decided to move my individual brokerage account that I have with E-Trade over to my Fidelity account. I'm a fan of Fidelity's integration with my existing retirement accounts and the very low expense ratio mutual funds they offer, and it would be nice to consolidate my accounts into one platform.
I am still a college student making a low income (<$20,000 per year), so I know the capital gains tax isn't likely to hurt very much in my current scenario, but I'd like to learn what the best course of action is both tax-wise and overall so I understand better in the future when my taxes would be higher.
One key note to all of this is that I'm only invested in one fund on E-Trade (BTIEX), and I plan on selling those holdings regardless of if they're in E-Trade or in Fidelity, since I'm looking for a new mutual/index fund with a lower expense ratio.
Here's what I think my options are based on my research:
- Sell my assets in E-Trade, transfer the money back to my bank, transfer the money to Fidelity, reinvest in my new mutual or index fund of choice. From what I understand, capital gains in this situation will be nothing for my long-term holdings (since I make under $40k), and the short-term gains will count as regular income towards my 2021 income tax.
- Transfer my assets to Fidelity using their account transfer tool. This would initially prevent any capital gains tax, but would also require a $75 transfer fee (that I've heard Fidelity may be willing to reimburse sometimes?). The capital gains would also set in once I sell those holdings through Fidelity, but I would avoid having to move cash from E-Trade, to my bank, then to Fidelity. One problem with this is that I read somewhere that certain mutual fund holdings (like my BTIEX holdings) can't be transferred to another company. How can I tell if that would be the case here?
My feeling is that the first option is better since I don't have to deal with a full account transfer and fees, the taxes are pretty low in my situation, and this would allow me to convert the gains I've made into principal while my taxes are low. Is this right, or am I missing something in this process?
Please let me know if I've missed any necessary information in this long-winded explanation. Thanks!
Edit: formatting
Submitted April 26, 2021 at 09:36PM by capo987987 https://ift.tt/2QYHCvB
