Moving between US brokers does not require selling and rebuying your holdings: an ACATS transfer carries them over as they are, which means no capital gains tax event.
Most people assume switching brokers means selling everything and buying it back. Do that and you realise a gain on purpose, handing the tax office a cheque for nothing.
Your positions move as they are
Transfers between US brokers run through ACATS, the Automated Customer Account Transfer Service. Almost every broker supports it, and the author describes it as very easy.
You start the request at the new broker, give the old broker's name, your account number and what you want moved, say a number of shares in a given fund. Choose everything and you don't even have to list the holdings.
Mutual funds are the exception
ETFs and individual stocks move as they are. Traditional mutual funds, the ones not traded on an exchange, are different: some brokers charge extra management and trading fees, so ask first.
The author recently converted VITAX, a Vanguard mutual fund, into its equivalent ETF, VGT. Vanguard allows this in-house switch, does not count it as a trade, and so does not trigger capital gains tax.
In one line: switching brokers is moving house, not liquidating. Check whether your old broker plans to make it awkward.
Why it matters
The tax difference often hides in the order of operations: moving money between two accounts costs nothing if the assets go across directly, and costs real money if you sell first. That matters most to anyone sitting on years of unrealised gains.
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