Ready to move on from ETRADE? Whether you're consolidating your investments, switching to a different platform, or simply exiting the market, closing your ETRADE account requires a few key steps to ensure a smooth and hassle-free process. Don't worry, we'll walk you through it!
Here's a detailed, step-by-step guide to help you close your E*TRADE account effectively.
The Definitive Guide to Closing Your E*TRADE Account
Closing a brokerage account might seem like a daunting task, but with proper preparation and understanding of the process, it can be quite straightforward. E*TRADE, now part of Morgan Stanley, has specific procedures to follow.
Step 1: Engage with Your Account – What's Your Current Situation?
Before you even think about hitting a "close account" button (which isn't usually how it works!), take a moment to assess your ETRADE account's current state*. This initial assessment is crucial and will dictate your next actions.
Do you have any active investments? This includes stocks, ETFs, mutual funds, options, bonds, or even cash sweep programs.
Are there any pending transactions? This could be an open order, a deposit that hasn't cleared, or a withdrawal still being processed.
Do you have any outstanding balances or margin loans? These must be settled before closure.
What type of account is it? Is it an individual brokerage account, a joint account, an IRA, or a business account? Each type might have slightly different considerations.
Do you have any linked external bank accounts or recurring transfers set up? These need to be addressed to prevent future issues.
Have you downloaded all necessary statements and tax documents? Once the account is closed, accessing these might be difficult.
Why is this important? Attempting to close an account with active investments, pending transactions, or outstanding balances will cause delays and potentially complications. Understanding your account's status upfront saves you time and frustration.
Step 2: Zero Out Your Account – The Essential Pre-Closure Clean-Up
This is arguably the most critical step. Your E*TRADE account must have a zero balance before it can be fully closed. This means addressing all assets and liabilities.
Sub-heading 2.1: Liquidating or Transferring Investments
You have two primary options for the investments held in your E*TRADE account:
Selling Your Investments: If you wish to simply cash out, you'll need to sell all your securities (stocks, ETFs, mutual funds, etc.).
Consider the tax implications: Selling investments can trigger capital gains or losses, which will impact your taxes. Consult with a tax advisor if you're unsure.
Allow for settlement time: Stock and ETF trades typically settle in T+2 business days (trade date plus two business days). Ensure you account for this time before attempting to withdraw funds.
Transferring Your Investments (ACATS Transfer): If you're moving to another brokerage, the most common and often most efficient method is an Automated Customer Account Transfer Service (ACATS) transfer.
Initiate from the receiving brokerage: Generally, you initiate an ACATS transfer from the new brokerage you're moving to. They will provide the necessary forms.
Ensure account types match: An individual brokerage account must be transferred to another individual brokerage account, an IRA to an IRA, and so on.
Be aware of transfer fees: E*TRADE charges a fee for outgoing full account transfers (currently $75, but this can change). Your new brokerage might offer to reimburse this fee, so it's worth asking them.
Not all assets are transferable: Some proprietary mutual funds or certain less common securities might not be eligible for ACATS transfer and may need to be liquidated.
Expect processing time: ACATS transfers typically take 5-7 business days to complete. During this time, your investments might be temporarily inaccessible.
Sub-heading 2.2: Clearing Any Cash Balances and Debts
Once your investments are handled, focus on the cash:
Withdraw all cash: Any remaining cash balance in your E*TRADE account needs to be withdrawn.
Linked bank account transfer: The easiest way is usually to transfer the cash electronically (ACH) to a linked external bank account. This can take 1-3 business days.
Wire transfer: For faster transfers, you can use a wire transfer, but E*TRADE may charge a fee for outgoing wires (currently $25).
Check requests: You can also request a check, though this takes longer.
Check for residual amounts: Ensure all expected dividends or interest payments have been credited before withdrawing funds. Any small amounts left after closure could be subject to escheatment (turned over to the state as unclaimed property).
Repay any outstanding loans or debits: If you have a margin loan, negative cash balance, or any outstanding fees, these must be repaid in full. Failure to do so will prevent account closure.
Cancel recurring transfers: If you have any automated deposits or withdrawals set up to or from your E*TRADE account, cancel them immediately to prevent further activity.
Step 3: Contact E*TRADE Customer Service – The Direct Approach
Once your account balance is zero and all assets are addressed, it's time to formally request the closure.
Sub-heading 3.1: Choosing Your Contact Method
E*TRADE offers a few ways to contact them:
Phone is generally recommended: Calling E*TRADE directly is often the most efficient way to close your account, as a representative can guide you through any specific requirements for your account type and confirm the closure process.
ETRADE Customer Service: 1-800-387-2331* (for brokerage or bank accounts).
Online/Secure Message (if available for closure): While some brokerages allow online closure, E*TRADE typically requires a direct contact for finalization. You can check their website or your online account for any "Close Account" options under "Account Services," but be prepared to call.
By Mail/Fax (less common for initial request): For specific situations, or if advised by a representative, you might need to submit a written request. However, it's usually best to start with a phone call.
Sub-heading 3.2: What to Expect During the Call
When you speak with an E*TRADE representative:
Clearly state your intention to close the account.
Be prepared for verification questions: They will ask security questions to verify your identity.
Confirm zero balance: The representative will likely verify that your account has no outstanding balances or pending transactions.
Inquire about any final steps: Ask if there are any forms you need to sign or any other specific actions required for your account type (e.g., for IRAs, there might be distribution forms if you're taking a full withdrawal).
Request a confirmation: Ask for an email or written confirmation that your closure request has been initiated and what the expected timeline is.
Step 4: Submit Any Required Documentation – Formalizing the Closure
While a phone call is often enough, depending on your account type (e.g., certain trusts, business accounts, or deceased accounts), you might be asked to submit additional documentation.
Sub-heading 4.1: Potential Documents
Signed Account Closure Form: E*TRADE might provide a specific form for you to sign and return.
Letter of Instruction: A signed letter explicitly stating your request to close the account, including your account number and reason for closure.
Identity Verification: Copies of government-issued IDs, especially if there are unusual circumstances or if you're closing an account on behalf of someone else (e.g., an estate).
For Deceased Accounts: You will need specific documents such as a death certificate, letters of testamentary, or other proof of authority. E*TRADE has a Beneficiary Services team (888-402-0653 or estates@etrade.com) for such cases.
Sub-heading 4.2: How to Submit Documents
Secure Document Upload: E*TRADE typically offers a secure online document upload tool within your account.
Fax: They also have general fax numbers (1-866-650-0003 from within the US, +1-678-624-6950 from outside the US).
Mail: Only mail documents if specifically instructed and to a verified E*TRADE address.
Step 5: Verify Final Account Status – The Confirmation
After submitting your request, it's crucial to confirm that the account has indeed been closed.
Look for confirmation emails/messages: E*TRADE should send you a confirmation once your account closure has been processed.
Attempt to log in: After the expected closure period, try logging into your E*TRADE account. If it's truly closed, you should no longer be able to access it.
Monitor external accounts: If you transferred funds or assets, verify that they arrived successfully in your new destination.
Check for any residual statements: Occasionally, a final statement might be mailed for a short period after closure, confirming the zero balance.
Important Note on IRAs: Closing an IRA requires careful consideration of tax implications. If you're under 59½ and take a distribution, it may be subject to income tax and a 10% early withdrawal penalty. Always consult a tax advisor before closing an IRA if you're not rolling it over to another qualified retirement account.
Step 6: Update Linked Services – Tie Up Loose Ends
Update bill pay or direct deposit: If your E*TRADE account was linked for direct deposits (e.g., paycheck) or bill payments, ensure you update these with your new bank account or brokerage.
Remove ETRADE from financial aggregators:* If you use services like Mint or Personal Capital to track your finances, remove your E*TRADE account from these platforms.
Frequently Asked Questions about Closing Your E*TRADE Account
Here are 10 common questions with quick answers to help you navigate the process.
How to empty my E*TRADE account before closing?
You can empty your E*TRADE account by selling all your investments and withdrawing the cash, or by initiating an ACATS transfer to move your investments to another brokerage account.
How to contact E*TRADE customer service for account closure?
The most effective way is to call E*TRADE Customer Service at 1-800-387-2331. Be prepared to verify your identity.
How to know if my E*TRADE account is eligible for closure?
Your account is generally eligible for closure once it has a zero balance, no pending transactions, and no outstanding loans or fees. E*TRADE customer service can confirm your eligibility.
How to transfer investments from E*TRADE to another brokerage?
You typically initiate an ACATS (Automated Customer Account Transfer Service) transfer from the receiving brokerage. They will provide the necessary forms to pull the assets from your E*TRADE account.
How to avoid fees when closing an E*TRADE account?
E*TRADE does not charge an account closure fee itself, but there is a $75 fee for outgoing full account transfers (ACATS). Some receiving brokerages may reimburse this fee.
How to close an E*TRADE IRA account?
Closing an E*TRADE IRA requires careful consideration. You can roll it over to another IRA custodian, or take a distribution (which may incur taxes and penalties if you're under 59½). Always consult a tax advisor first.
How to handle pending transactions when closing E*TRADE?
All pending transactions, such as open buy/sell orders or deposits/withdrawals, must fully settle before you can close your account. This may take a few business days.
How to get my tax documents after closing my E*TRADE account?
It's highly recommended to download all past statements, trade confirmations, and tax documents before closing your account. If you forget, you may need to contact E*TRADE for assistance, which could be more difficult after closure.
How to close a joint E*TRADE account?
For joint accounts, both account holders typically need to authorize the closure. It's best to call E*TRADE customer service together to confirm specific requirements.
How to know when my E*TRADE account is fully closed?
You should receive a confirmation notice from E*TRADE (often via email or postal mail) once the account is officially closed. You will also no longer be able to log in to the account.
