Should I consider taxes when liquidating funds prior to transferring them?

In rare cases, you may own funds which Fidelity or TD Ameritrade cannot hold. If your portfolio has any of these funds, you will need to liquidate these funds in your current account in order to transfer the proceeds. FutureAdvisor will proactively alert you if this is a consideration.

If positions are held in a tax deferred account (like a Traditional or Roth IRA), you won't trigger taxes on this sale as the account is sheltered from capital gains.

However, liquidating positions in taxable accounts (like an Individual or Joint account) may result in a gain or a loss. If you’ve made money on the position, the capital gains tax rate depends on how long you’ve held the position, your annual income, and your state of residence. Positions held longer than a year are taxed as long-term gains and typically taxed between 15-20%. Positions held less than a year are taxed at your income level, which is typically something to avoid unless the gain is minimal.

If you decide to liquidate prior to transfer, please contact your brokerage firm and ask them to liquidate the funds in this account, and FutureAdvisor can then help with any additional paperwork required. You should contact a tax advisor if you have any concerns about the tax impact relative to your situation.