Overview of Closing a Schwab Account
Closing a brokerage account at Schwab is a fairly straightforward task, thanks to the company’s user-friendly software. Use our guide to get started.
Eliminate Assets First
Before attempting to close an investment account at Schwab, the first thing you need to do is close out or transfer all positions, including both securities and futures. They can easily be transferred in a partial transfer either internally to another Schwab account or externally to a brokerage firm that participates in ACATS transfers. The latter system is handled by the receiving brokerage firm.
For an internal transfer, hover over the Accounts tab in the top menu and select Transfers & Payments from the drop-down menu. First, you’ll need to select what you want to transfer (cash only, positions only, or both). Then select the outgoing and receiving accounts. Finally, specify the positions and share amounts to be moved and submit the transfer.
Of course, it’s possible to skip the transfer tool and simply liquidate holdings. Doing so will turn them into cash, which can be moved to another account.
Eliminate Cash Next
If you didn’t transfer cash along with securities out of the account, you probably have some cash remaining in the account. This will need to be moved out of the account before closing it. This can be accomplished in several ways. The tool we just looked at can move available cash to an external bank account. Schwab also offers wire transfer, bill pay, and withdrawal by paper check. All of these methods are displayed on hyperlinked tiles on the Transfers & Payments page.
Closing the Schwab Account
Once the account has been completely drained and it has a $0 balance, it’s time to close it. This, too, can be accomplished in one of several ways. A request to close an account can be sent to Schwab via the chat service on the website (it is human chat only), by visiting one of Schwab’s many branch locations throughout the United States, by using the secure message system on the website, or by calling the company at 800-435-9050.
The chat service can be found on the website by clicking on the dialogue cloud icon at the top of the site. The internal messaging widget is represented by an envelope icon, which is in the same top row as the dialogue cloud icon.
More difficult methods are available as well. These include fax (888-526-7252) and snail mail. This second option has a variety of addresses, which vary depending on the mailing address of the account.
Although Schwab’s mobile app does have an Artificial Intelligence, it cannot be used to close an account.
A full account transfer through the ACATS system to another brokerage firm will automatically close the Schwab account. This method is perhaps the easiest way to get the job done. However, Schwab does charge $50 for a full outgoing transfer. An ACATS transfer must be initiated with the receiving brokerage firm.
Top Charles Schwab Alternatives
Closing Schwab Taxable Accounts
Selling positions to drain a taxable account most likely will result in tax consequences the following April with a Form 1099-B from the IRS. Make sure you fully understand the tax rules before taking this step.
Canceling Schwab Tax-Advantaged Accounts
Although exiting positions is usually a non-event inside a tax-deferred account, withdrawing securities from such an account could be a major event. Once again, you should fully understand the implications for doing this. Consult a qualified tax expert for help if necessary.
Closing Schwab Robo Accounts
It is possible to close an automated account (also known as an Intelligent Portfolios account). However, only cash can be moved out of such an account. Schwab is the one who has trading authority over the account, and it may take a few days for the company to liquidate all funds inside of the account.
Once the account is fully liquidated and all trades have settled, you can move cash out using one of the methods already mentioned.
Promotions
If you are transferring your Charles Schwab investment account to another firm, make sure to check
whether that company offers promotions for opening a new account. Here is the list of current deals
- Stock Broker Promotions »
Reminder about Links to Schwab Bank Accounts
Schwab’s High Yield Investor Checking account, available through Schwab Bank, must have a link to a brokerage account. Any brokerage account that has previously set up this connection cannot be closed while the deposit account is open. It is possible to switch the connection to another investment account or close the bank account.
How to Close a Bank Account at Schwab
If you do need to close an account with Schwab Bank, the procedures will largely be the same, although the ACATS network is off limits. In its place, Schwab offers Zelle transfers free of charge.
Using ACATS to Close a Schwab Account
One of the best parts of the Automated Customer Account Transfer Service (ACATS) is that a full transfer automatically closes the outgoing account. This feature can be used to close a targeted account.
To request a full ACATS transfer from the Schwab account to another brokerage firm, you’ll need to send the request to the receiving firm, who will then notify Schwab. Most online discount brokerage firms have user-friendly tools to request an ACATS transfer, which speeds up the process and makes it really easy. A full transfer takes about a week and a half to complete. After that point, all assets in the Schwab account will show up in the second account, and the Schwab account will be closed by Schwab.
Only a full ACATS transfer will close the old account. A partial transfer won’t work. Also, the receiving and outgoing accounts must be the same type (such as joint account to joint account).
Either a self-directed or robo account at Schwab can be closed using this method. Keep in mind, however, that for the automated service, Schwab will sell all holdings because only cash can be moved out. This could produce tax consequences in taxable accounts.
Although Schwab does have an ACATS transfer fee, some brokerage firms will refund it.
As an example, see how to Transfer a Charles Schwab Account to Webull.
Closing a Schwab Account for a Deceased Person
Although losing a loved one is never easy, Schwab has tried to make the process a little easier, at least for liquidating financial accounts and the inevitable bureaucracy that comes with such an event. Schwab has a notification page that will get the ball rolling by letting Schwab know of the death. Schwab will secure the account and notify any inheritors or estate professionals associated with the account. The notification page has an upload tool to send Schwab a copy of the death certificate. A letter of testamentary can also be submitted if you’re the executor of the will.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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