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ACATS: Automating Asset Transfers

Generally, an ACATS transfer is faster and more convenient than other types of transfers.

Articles by Betterment Editors
By the Editorial Staff Betterment Resource Center Published Dec. 14, 2018 | Updated Aug. 18, 2021
Published Dec. 14, 2018 | Updated Aug. 18, 2021
6 min read

TABLE OF CONTENTS

How ACATS Transfers Work At Betterment

When possible, we use the ACATS method (Automated Customer Account Transfer Service), to electronically transfer assets and cash to Betterment. Generally, an ACATS transfer is faster and more convenient than other types of transfers.

Here’s an overview of how the ACATS transfer process works at Betterment. Please see our full ACATS terms and conditions for more information.

1. We’ll notify your current provider of the account(s) that you’d like to transfer.

  • We can do all the heavy lifting—usually there is no paperwork needed on your side.
  • Full and partial transfers requests can be made.
  • See Account Eligibility for the full list of account types that may be eligible for ACATS transfer.
    • Note: Depending on a number of variables, human support and paperwork may be required to complete your ACATS transfer.

2. Your current provider will review the details of your specific request and send us the corresponding investments and any cash in your account(s).

  • It generally takes 5-6 business days for a transfer to complete.
  • Any investments will continue to be invested throughout the transfer process.

3. We take care of aligning any investments or cash received to match your target portfolio strategy at Betterment.

  • We automatically reinvest any cash received at the first available opportunity.
  • For taxable account transfers, we will efficiently incorporate any ETFs that match those used in your target Betterment portfolio strategy. Some selling may still occur in the transition as we work to achieve your desired asset-class weightings.
  • For any ETFs and mutual funds that do not align with the investments we use in our portfolio strategies, we attempt to first sell shares that are trading at a loss or that you’ve owned for at least a year. This is an attempt to avoid realizing short-term capital gains, which are generally taxed at a higher rate than long-term capital gains.
  • Betterment cannot custody single stocks. Any stock(s) transferred will be immediately sold, and the cash proceeds will be automatically reinvested into your target Betterment portfolio strategy.

Please see our full ACATS terms and conditions for more information.

Accounts Eligible For ACATS

Betterment has the ability to electronically transfer nearly all ETFs and cash, as well as many mutual funds and single stocks, provided they are held in an ACATS eligible account. When determining if your account is eligible for an ACATS transfer, we verify that the account meets all of the following requirements:

  • Held by a provider that supports ACATS transfers.
  • Classified as an ACAT-eligible brokerage account by your current provider.
    • Legacy mutual fund accounts, annuities, and employer-sponsored plans (like a 401(k) or pension plan), generally, cannot be ACATSd.
  • Contains investments Betterment has the ability to transfer in-kind.
  • Have an account balance greater than $8,000.

Accounts Eligible For Instant, Paperless ACATS Transfer

At this time, Betterment requires you to connect any individual taxable and IRA accounts that you’d like to be considered for paperless ACATS transfer. Paperless ACATS transfers can be initiated directly from your Betterment account, with the click of a button.

Note: We also support ACATS transfers for some joint accounts, trust accounts, and inherited IRAs but you’ll need to work with one of our transfer specialists, rather than through the website, as instant and paperless transfers are not yet an option for those account types. Please see the “Accounts Eligible For Manual Paper ACATS” section below.

How to begin the paperless ACATS transfer process.

1. Make sure you have a connected account.

  • To instantly connect an account, log in on a web browser, scroll down to the Connected Accounts section, and click “Connect accounts.”

2. Review your accounts eligibility and initiate the transfer.

Select “Transfers” from your Menu bar and then navigate to the section titled “Transfer a connected account”.

  • Individual Taxable Account: If your individual taxable account is fully eligible for ACATS transfer, arrows and the words “Eligible for automated transfer” will appear underneath your connected account. Click those words to start the process.
    • Note: If you’d like to transfer only a portion of your taxable account and/or it is not showing as “Eligible for automated transfer”, ACATS may still be an option, but manual review will be required. Please email transfers@betterment.com to begin a conversation with a specialist.
  • Traditional, Roth, or SEP-IRA: If your IRA account is eligible for either a full or partial ACATS transfer to Betterment, arrows and the words “Eligible for automated transfer” will appear underneath your connected account. Click those words to start the process.
    • Note: If you’d like to move your full IRA account to Betterment but your account is only partially eligible for an ACATS transfer, you’ll still see “Eligible for automated transfer” messaging. However, when you get to the end of the flow you’ll either be presented with the option to electronically fax your transfer paperwork, or, you’ll be prompted to manually complete and mail your IRA transfer paperwork to your current provider. Both options are perfectly suitable but will result in your IRA proceeds being mailed to Betterment in check form.
      • If you are not presented with the full ACATS transfer option and you’d prefer to move only the portion of your account that’s eligible for ACATS transfer, start over by selecting “Eligible for automated transfer” and then select the partial transfer option to see what’s eligible.
        • Note: Some customers, only eligible for a partial IRA ACATS transfer, prefer to liquidate all of their ineligible investments and/or entire account, so that their account can be electronically transferred to Betterment in full. If you would like to transfer your IRA as cash, you must first sell your assets at your current provider. Once the liquidation is complete, you can follow the steps above.
    • If your account is not showing as “Eligible for automated transfer” and/or you are not being presented with the ACATS option for a full transfer, a full electronic transfer may still be possible, but manual review will be required. Please email transfers@betterment.com to begin a conversation with a specialist.

Accounts Eligible For Manual Paper ACATS Transfer

Since Betterment does not currently allow customers to initiate ACATS transfers for joint accounts, trust accounts, partial individual taxable accounts, or inherited IRAs, directly from the website, manual review will always be required.

It’s highly likely that our transfer specialist team will still be able to submit a full or partial ACATS transfer request, assuming you meet the general requirements highlighted in the “Accounts Eligible for ACATS” section above.

How to begin the paper ACATS transfer process.

Please email transfers@betterment.com to begin a conversation with a transfer specialist.

  • You’ll be asked to securely upload your most recent account statement for review, after which personalized transfer guidance will be provided.

Note: If you are looking to move an account that’s $100,000 or greater in value, feel free to request assistance from our Licensed Concierge team directly.

Tax implications of moving an account through the ACATS system.

When deciding whether to switch from another provider, it’s smart to consider the benefits alongside any potential tax implications.

IRA Accounts: Since we use the direct trustee-to-trustee transfer process, to move IRA accounts electronically to Betterment, there are generally no taxes or penalties to make the switch. Once we receive your IRA transfer(s), we will sell any investments moved in-kind and then use your cash proceeds to buy new shares of the ETFs that make up your target Betterment IRA portfolio.

Taxable Accounts: As stated in the “How ACATS Transfers Work at Betterment” section above, while any investments moved via ACATS will continue to be invested throughout the transfer process, once your assets have been transferred, our rebalancing system takes over in an effort to move you as close to your target Betterment portfolio strategy as possible. Given the nature of taxable accounts, we attempt to do this thoughtfully.

If you’re moving in ETFs, which overlap with the ones used in your target Betterment portfolio, we will keep the shares and incorporate them, only selling if holding onto the excess would mean your portfolio is not properly weighted. For any mutual funds or ETFs, that do not overlap with the ones we use in your target Betterment portfolio, our rebalancing system will take over and trade out of all of your “foreign” shares. This is so that the cash proceeds can be used to buy new shares of the ETFs that make up your target portfolio.

Note: We will not sell any shares trading at a short-term gain. Only shares trading at a long-term gain or loss will be sold. Over time, our system will continue analyzing your short-term holdings and if any begin trading at a loss or ultimately become long-term, our system will further rebalance.

Finally, any single stocks transferred to Betterment are immediately sold, regardless of underlying details.

Contact Us

As always, our transfer team is available to assist as needed. Please do not hesitate to reach out to transfers@betterment.com for dedicated support.

To learn more information, please see ACATS terms and conditions.

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Please note that Betterment is not a registered tax advisor and information presented is meant to be educational only. Please consult a qualified tax advisor.

This article is part of
Betterment's Customer Help Center

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