[Crystal]

Based on the groups guidance, we decided to move funds from Edward Jones to Fidelity.

We are in the process of moving funds but have ran into an issue.

Seems Fidelity cannot bring over all of the funds because some of the funds are holding positions with Edward Jones that Fidelity does not support.

Only half of our money transferred from EJ to Fidelity.

We are attempting to move a joint brokerage account, traditional IRA, and two ROTH IRA accounts over.

Fidelity is saying we can sell or liquidate the funds left with Edward Jones and then move the cash to Fidelity and then invest.

My questions is what are the tax implications of this? What is the best route to take?

Feels like overwhelming chaos right now.

[Ron]

Great move. EJ is insane the way they incentivize their “financial advisors” to push sub+par funds unknowingly on their clients.

Their 63-page of fees is filled with of clear conflicts of interest with their clients and they disclose them openly but their clients never read it!!!! Crazy.

[Charlotte]

Congrats on leaving EJ! It’s probably a good thing that you need to sell the crap EJ had you in.

Start fresh! No tax implications in IRAs but there will be capital gains tax on the gains in the brokerage account (not your contributions).

Find out what the unrealized gains are in the brokerage so you know what to expect.

Even if you have to pay some tax it will be worth it in the long run to get away from those high EJ fees and let your money grow as it should!

[Frank]

Fidelity is correct. There are no tax implications for any of the sales in the IRAs, just make sure you do not withdraw the money.

It must be transferred to the new accounts directly.

For the ordinary brokerage account, there are potentially taxes on any capital gains, so you need to know what those are.

Long term capital gains are taxed at the 0% or 15% rate for most people, unless you are really high income.

[Brian]

The funds that can’t be transferred in-kind are likely EJ proprietary funds or something similar.

[Mark]

Sell the holdings in the qualified (pre-tax) accounts at EJ before transferring them as cash to Fidelity…

this is a tax free transaction as the funds remained qualified and they weren’t distributed to you.

Just to add a bit more chaos…

consider making ROTH conversions at this time if aligned with your goals and other taxable income.

Brokerage accounts entities that must be sold prior to transfer will create a taxable event.

[Christopher]

Traditional and Roth IRAs will have no tax implications. Brokerage will be taxed based on the gains (which may be a tax deduction if there are losses).

[Allison]

Congrats on leaving EJ! The best decision my mother ever made was to let us sever her relationship with them, and even though it took about $500 to close out her multiple accounts (thank you, EJ “closing fees” , it was so worth it.

We transferred “in kind” the funds that Vanguard (in our case) also offered, and liquidated the proprietary American Fidelity (or whatever garbage) funds her EJ financial “advisor” sold her.

Vanguard transferred that money over into a money market account, so we were able to invest that money into Vanguard funds afterwards.

This was all retirement accounts.

[Sean]

Yes that is true and it’s okay, you don’t want to be in those funds anyways.

You’ll owe tax, but people always get overly upset about that.

If you owe taxes, it just means you made money.

That’s a good thing. The whole point of investing is to make money.

[Spencer]

My mom had the same situation with Morgan Stanley. Luckily her proprietary junk was all in an IRA so there were no tax implications.

Sold everything and moved to Schwab.

[Lisa]

After you finish the transfer, when EJ charges you fees to close your accounts, tell Fidelity what those fees were and they should reimburse you for them.

[Sarah]

Only a taxable account will have tax implications. Tax safe havens will stay tax free for any selling and buying happening within the vehicle.

[Author]

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