What to Do If Your Broker Refuses to Transfer an IRA Account

Normally, brokers transfer accounts through the Automated Customer Account Transfer Service operated by the National Securities Clearing Corporation. To start the ball rolling, open an account of the same type with the new, or receiving, broker. Make sure the old and new accounts have the same identifying information, such as your Social Security number and the spelling of your name. Fill out the receiving broker’s transfer initiation form, which contains information about the old account and the assets you want to move. Any mistakes in identifying the old account will delay the process. Normally, the transfer shouldn't take more than six days, but complications can arise.

The delivering broker will not process a transfer if any of the information is incorrect or missing. This is to protect your account from unauthorized transfer. Some assets in your account might cause a delay, especially if you want to sell them before the transfer. For example, you might own shares of restricted stock that the delivering broker can’t sell. If the delivering broker lent you shares for a short sale, it might want the shares returned before completing the transfer. Normally, your old broker will tell you about any such problems.

You might feel that a delivering broker is holding up the works when in fact the receiving broker is the problem. Your receiving broker can refuse to accept a transfer containing unwanted assets. For example, a receiving broker might balk at holding your IRA’s annuities, bankrupt securities, shares in a private limited partnership or securities sold exclusively by the delivering broker. If this is the case, you can sell the offending assets or find a more willing broker. Some brokers have minimum account requirements that your IRA might not satisfy. If you haven’t made your full annual IRA contribution yet, you might be able to beef up the account balance before the transfer. Otherwise, find a less-restrictive broker.

You can skip the trustee-to-trustee transfer and simply withdraw the money from your old account. You then have 60 days to roll it over tax-free into the new account. If you miss the deadline, however, the IRS will slap you with taxes and possibly with early withdrawal penalties. If you withdraw non-cash assets, you can sell them and contribute the money instead, buy you can’t keep them and substitute your own money. If you think the delivering broker has behaved improperly, file a complaint with the Financial Industry Regulatory Authority. The complaint form is available online at the FINRA website. The New York Stock Exchange also accepts complaints about brokers.