I started moving more than 45% of my investment from Robin Hood to Fidelity on Friday. I wanted to do this before Robinhood goes belly up and I can be within FDIC insured range. I have a handful of ETFs and most of them have fractional shares as well (ex 34.89 shares) Has anybody transferred from Robinhood before and know how it works? Will they sell the securities and then buy new ones? Would I get the same number of shares on Fidelity as much as I had on Robinhood? What happens to those fractional shares? Are there any tax implications like capital gains even if I had the shared in Robinhood for more than a year? Total I'm Robinhood: 310K Currently moving: 150K TC 380K
Pretty sure you still own the shares even if they go under
With payment for order flow, I'm not so sure
That's misinformation. Orders are settled in the end. Order routing doesn't have anything to do with one owning their shares. Order routing still happens with the same market makers (citadel, virtue etc) regardless of payment received by brokerage or not
If stocks are sold and bought again your cost based will be reset to current value and you will be on hook to paying taxes. You should be able to do stock transfer so there is no sale and buy of stocks and thus no tax implications. Actually you owns the stocks/ETF, Robinhood is just a custodian. So when if they go bankrupt yours stocks will be fine. Just the custodian will change(cash is a different story).
https://digital.fidelity.com/prgw/digital/easy/MmToaGuidedHelp/StartPage The stocks/ETF won’t be sold. It will be just transfer of assets from Robinhood to Fidelity. It won’t be taxable event
You are moving $150k because of an insurance limit that is irrelevant. Securities are covered by SIPC up to $500k. I would be more careful with such large decisions.
AFAIK Robinhood will charge $75 for letting the transfer go and the fractional part will be liquidated. This is what I read a year back.
The destination brokerage can cover the transfer fee if you ask them
Stocks are insured by sipc btw and not FDIC And insurance is 500k for sipc vs 250k FDIC https://robinhood.com/us/en/support/articles/how-youre-protected/
Will fdic cover the case of brokerage going belly up?
There's an equivalent insurance for brokerages. It is called differently though Update: it is called sipc: it has a limit up to 500k in security, but only 250k in cache Update: well looks like it isn't exactly equivalent, since sipc is not a federal agency. So there's some protection, but who knows what happens if sipc itself goes bankrupt as well :/