Brokerage Transfer Bonus Made Easy for Total Beginners

Although I stopped chasing bank and brokerage bonuses, it’s still a valid way to make some money. You can easily make $5,000 or more each year with a large enough account. The bonus can fund nice-to-have toys or experiences or simply add to your long-term investments.

I’m not saying you should or shouldn’t do it. If you’re interested but haven’t done it before, here are some pointers to help you pull it off more easily.

Table of ContentsThe Big PictureChoose a Bonus PromotionTransfer an IRAIdentify Shares to TransferOpen a New AccountSubmit Transfer RequestTurn On Dividend ReinvestmentSet Calendar RemindersThe Big Picture

Some brokers want to attract new customers and more activities. Offering a bonus to actual customers can be more effective than spending millions on advertising. You receive a bonus from the broker by participating in the promotion. They get to show growth to Wall Street. Win-win.

Choose a Bonus Promotion

Many promotion offers are listed in Best Brokerage Bonuses on the Doctor of Credit blog at any time. Some offers are from larger brokers you’ve heard of. Some are from smaller brokers you didn’t know. All offers require that you hold the transferred assets at the new broker for some time. I would favor offers from a larger institution with a shorter required holding period.

For instance, as I’m writing this, WeBull offers a 2% bonus with a 2-year holding period and Wells Fargo offers a $2,500 bonus for transferring $250,000. Although WeBull’s bonus is twice as large ($5,000 versus $2,500 for transferring $250,000), Wells Fargo’s promotion only requires holding the transferred assets for 90 days. You get the bonus sooner and the assets can move again after 90 days to earn another bonus elsewhere. Wells Fargo is also a better-known institution than WeBull. I would pick Wells Fargo’s offer over WeBull’s.

Transfer an IRA

If the promotion doesn’t exclude IRAs, it’s easier to transfer an IRA than a taxable brokerage account. Although the cost basis for holdings in a taxable account should transfer over to the new broker, there’s a risk that it doesn’t or it’s messed up by the transfer. You avoid this risk by transferring an IRA (either Traditional or Roth), where the cost basis doesn’t matter.

If the bonus is paid into an IRA, it counts as earnings in the IRA. You can still receive the bonus in the IRA even if you already maxed out the IRA contributions for the year or you’re no longer eligible to contribute. The specific Wells Fargo promotion I used as an example pays the bonus into a checking account, which makes it taxable, but other promotions usually pay the bonus to the account transferred.

There are no tax consequences when you match the IRA type to transfer: Traditional-to-Traditional or Roth-to-Roth. There won’t be any 1099 forms for the transfer.

Transferring an IRA avoids complications otherwise present in a taxable account. Because an IRA is always in only one person’s name, if you’re married, you and your spouse can sign up for the promotion separately and double up on the bonus by transferring your respective IRAs.

Identify Shares to Transfer

You don’t need to transfer the entire IRA. Identify some shares that you won’t touch. Those shares can go to the new broker.

Don’t sell the shares. You’re only moving the same shares “in kind” from one broker to another. The values of those shares will be the same no matter where they’re held. Individual stocks and ETFs are easier to transfer than mutual funds. Keep any cash in your existing account.

If you intend to trade some of the shares, leave those in the existing account. Rebalancing and withdrawing from the IRA usually involves only a small percentage of your holdings. For example, suppose you have 10,000 shares in a holding, 8,000 shares can be transferred to the new broker. You use the remaining 2,000 shares in your existing IRA to rebalance or take withdrawals.

The idea is that you’ll split your IRA into an “at-home” account and a “traveling” account. You still do everything you normally do in the “at-home” account that you’re already familiar with. The “traveling” account contains holdings you won’t touch. It travels from one place to another to earn bonuses. You won’t do any trading in the “traveling” account at the new broker besides turning on automatic dividend reinvestment. You don’t need to learn how the new account works. It only sits idle waiting for the bonus.

Open a New Account

After you identify which IRA and which shares you’ll transfer, you open an empty new account of the same type at the new broker. Be sure to read the promotion requirements. This part is critical to receive the bonus. If you need to enter a promo code when you open the account, include the promo code. If you must use a specific link, use the link. If you must visit a branch, visit a branch.

Make sure to match the exact spelling of your name and your Social Security Number between your existing and new accounts. Set up your online login, password, and 2-factor authentication at the new broker. Designate beneficiaries for your new IRA.

Submit Transfer Request

Inter-broker transfers go through a system called ACATS, which stands for Automated Customer Account Transfer Service. You always initiate it at the receiving broker. You give them your account number at the sending broker with a recent account statement. You request a partial account transfer with the positions and the number of shares you identified. It takes a week or two to complete.

If the sending broker charges you a transfer fee, you can request a reimbursement from the receiving broker. If they don’t reimburse you, chalk it up as being covered by the transfer bonus you’ll receive.

Turn On Dividend Reinvestment

Turn on dividend reinvestment at the new broker after your transferred assets arrive. Now the new account will run on autopilot while it waits for the bonus.

Set Calendar Reminders

Set a calendar reminder for when you expect the bonus to show up based on the terms of the promotion plus 7-10 days. I received the promised bonus in all the promotions that I participated in before. Some of them might have been late by a few days but they always came.

Set another calendar reminder for when your assets are free to move again without losing the promotion bonus. Give a liberal buffer. If the promotion requires a 90-day holding period, hold your assets at the new broker for 120 days. Look for the next destination for your “traveling” account after you’ve fully satisfied the terms of the promotion. Your next transfer can be a full-account transfer of this “traveling” account to its next destination.

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It takes some time to plan and execute for the first time but it isn’t too difficult. It gets easier the second time or the third time around. You decide whether it’s worth making $5,000 a year with this endeavor.

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