How the TD Ameritrade to Schwab Transition Impacts You

Since 2018, Prudent Investors has used TD Ameritrade (TD) as its custodian to custody its client assets.  

In November 2019, Charles Schwab (Schwab) announced that they would be acquiring TD Ameritrade in an all-stock transition. The TD Ameritrade to Schwab acquisition, which boasted lower operating expenses and enhanced client experience, was expected to close in the second half of 2020 with integration efforts kicking off shortly thereafter. Close to four years after the initial announcement, Schwab is finally ready to finalize the transition. As of September 2, 2023 TD’s accounts will transition to Schwab.

FAQ About the Ameritrade Schwab Merger

What does this mean for me?
Your assets will be held with Schwab after the transition. Although your assets will now be custodied at Schwab and have a new account number, Prudent Investors will continue to be your investment advisor, independent from Schwab. Nothing will change in our relationship with you as your investment advisor; we will continue to manage your accounts and be your primary contact. 

Please note that if you have assets with other advisors that clear through TD, they will also go through this similar conversion process.

What are the advantages of the Ameritrade to Schwab Acquisition?
Schwab’s technology should allow for streamlined methods to request funds, access funds, and approve paperwork. For certain accounts Schwab also allows features such as bill pay.

Will I need to fill out new paperwork?

Prudent has taken measures with Schwab to make the transition process as seamless as possible. Our transition team has worked behind the scenes with Schwab so re-papering will not be required to transition the accounts.

How will I access my accounts?

After September 1, 2023, your Schwab account may be accessed through Schwab’s client portal, called Schwab Alliance. Schwab Alliance will offer more features than TD’s client portal, as it will allow you to sign forms electronically and approve money transfers.

Additionally, Prudent provides its own client portal, My Prudent. This portal will allow you to see TD and Schwab statements, review account performance, and send documents directly to Prudent. If you’ve not yet set up your My Prudent portal account, please reach out to our team to get started.

Key Transition Dates

• 1 Month prior to Transition (approximately August 1): You should receive an email from Schwab to setup your online portal at Schwab Alliance using your credentials from TD’s AdvisorClient.com
• 5 to 10 days before transition (approximately the last two weeks of August): Be on the lookout for a key information letter that includes your new Schwab account numbers.  If your account at TD had debit and checks, you should be receiving those in the mail also.
• August 18, 2023: New account openings, account closures, and address changes will be put on pause  at TD Ameritrade and Schwab until after the conversion finishes on September 5.
• September 1, 2023: TD Ameritrade Institutional Accounts will transition starting at 5:30PM Pacific.  You’ll have full access to your account at TD through September 1st.
• September 5, 2023: First day to begin using your new Schwab account.

For our Individual Clients:

Will I need to change my direct deposit and ACH instructions?

For individual accounts, ACH, wires, checks, and internal transfer standing instructions that are already on file at TD Ameritrade will transfer over as part of the merger.  

If direct deposit instructions were set up at your bank, you will need to update those instructions to reflect your Schwab account information, which you should receive around the last week of August. 

Please contact us if you need Schwab’s routing numbers or addresses when setting up your direct deposit instructions at your local institution. You may also refer to the bank instructions in the appendix below.

Will contribution and distribution instructions for my retirement accounts transfer over?

Most recurring contribution and distribution instructions, such as traditional IRA accounts and Roth IRA accounts, will transfer over without issue. However, there are some exceptions.  Contribution instructions via ACH for individual 401(k) and SEP retirement accounts will not transfer over and contribution instructions via ACH and internal transfers to SIMPLE IRA accounts will also not transfer over.

For our Fiduciary Clients:

Will my Trust Accounts transfer over?

Trust accounts and trustee information will transfer over with no new actions required on your side.

Will my Trust Account bank instructions transfer over?
Yes, ACH instructions will transfer over for trust accounts. If your account with TD currently has checking and/or debit card features, those will transfer over too.

Will my Conservatorship, Guardianship, and Estate accounts transfer over?

We’ve worked with Schwab to coordinate a smooth transition, and these accounts will transfer over. However, Schwab’s platform setup does not allow ACH and bank account instructions to transfer over or new ACH instructions to be created for conservatorship, guardianship, and estate accounts.

How can funds be accessed for Conservatorship, Guardianship, and Estate accounts?

Schwab allows these accounts to send out funds either through check writing or wire transfers.  Wire transfers are free if initiated through Schwab online, though there may be a charge at the receiving bank. For accounts that are impacted by Schwab’s ACH policies, we will be reaching out to you to assist you in adding checks or wiring instructions to your accounts.

There is also another option, which is opening an operating account at Schwab bank and then journaling funds from that Schwab brokerage account to the operating bank account with Schwab. If this is something you are interested in, please reach out to us after September 1.

Will I receive multiple tax documents?

Yes, you will receive two 1099s for the 2023 tax year. TD Ameritrade will send a 1099 for the period of January 1, 2023 to September 1, 2023.  Schwab will send a 1099 for the period of September 2, 2023 to December 31, 2023.  We recommend you notify your accountant that there will be multiple 1099s as a result of  the merger.  

Additionally, the accountant should be aware that there will most likely be residual transactions for dividends that will be swept from TD’s accounts to Schwab in the month or so following.

Direct Deposit Instructions

Instructions provided by Charles Schwab 

Schwab accounts without Schwab One Checks

Accounts without the Schwab One checks feature such as brokerage, Schwab One (including Schwab One with linked Schwab Bank Investor Checking™), IRA, etc. ACH Credit Only supported. 

• Financial institution name: JPMorgan Chase/Account of Charles Schwab
• Financial institution address: 211 Main Street, San Francisco, CA 94105
• Financial institution telephone: 800-435-4000
• Schwab’s direct deposit transit routing number: 071000013
• Account number: Schwab’s 9-digit account number, 593853800, plus your client’s 8-digit Schwab account number (You must provide all 17 digits to set up direct deposit.)
• Account type: Checking (Schwab’s master account at JPMorgan Chase is a checking account. For proper processing, account type must be designated as “checking,” regardless of the type of account your client holds at Schwab.)
• Account name: Your client’s Schwab account registration

Other Information:

For Social Security/Supplemental Security or other federal government income, your client can submit direct deposit instructions at ssa.gov, or they can call the Social Security Administration’s ACH Transfer Department at 800-772-1213 and provide the information above to the payer.

Schwab accounts with Schwab One checks

Provide the following ACH instructions to the financial institution sending the deposit to Schwab (may take at least two pay periods to establish):

• Financial institution name: Charles Schwab & Co., Inc.
• Financial institution address: P.O. Box 982600, El Paso, TX 79998
• Financial institution telephone: 800-421-4488
• Direct deposit transit routing number (ABA number): 031100157
• DDA number: Your client’s 10-digit checking account number located at the bottom of a Schwab One check (This checking account number always starts with the number 7.)
• Account type: Checking

Other Information: If a client’s account has recently converted to a Schwab One with Investor Checking account, any automatic payments and direct deposits from their old account will need to be reestablished with Schwab Bank.

The above stated BNY Mellon routing instructions will no longer work 90 days after the conversion.

Use alternate routing instructions provided for Schwab Bank accounts stated below.

Schwab Bank accounts

Schwab Bank Investor Checking™ and Schwab Bank Investor Savings™ accounts provide the following ACH instructions to the financial institution sending the deposit to Schwab (or you can use a Schwab Bank Direct Deposit Set-Up Information form):

• Financial institution name: Charles Schwab Bank
• Financial institution address: 2360 Corporate Circle, Henderson, NV 89074
• Financial institution telephone: 877-824-5625
• Direct deposit transit routing number: 121202211
• 12-digit checking account number (where “XXXXXXXX” represents the client’s 8-digit Schwab Bank account number):
  • Checking: 4400XXXXXXXX
  • Savings: 3000XXXXXXXX
  • Account type: Checking or Savings

For Investor Savings accounts, use the routing number listed in the section above, not from a deposit slip. For direct deposits linked to the Schwab One accounts, see Schwab accounts with Schwab One checks above.

We constantly strive to provide our clients with the best experience and cutting-edge technology. With great confidence, we believe the transition from TD Ameritrade to Schwab will bring remarkable benefits. Nonetheless, we understand that you might still have some lingering thoughts or concerns. We’re here to provide answers to any questions or concerns you may have. Please do not hesitate to contact us through our online submission form or by email at info@prudentinvestors.com

This blog is general communication being provided for informational purposes only. This information is in no way a solicitation or offer to sell securities or investment advisory services. It is educational in nature and not to be taken as advice or a recommendation for any specific investment product or investment strategy. This does not contain sufficient information to support an investment decision. Any investment or investment strategy mentioned may not be suitable for all investors or in their best interest. Statistical information, quotes, charts, references to articles or any other quoted statement or statements regarding market or other financial information is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. All rights are reserved. No part of this blog including text, graphics, et al, may be reproduced or copied in any format, electronic, print, et al, without written consent from Prudent Investors. Prudent Investors does not provide legal or tax advice. Please consult with your investment advisor, attorney or tax professional before making any investment decisions. Investment advice offered through Prudent investors Network, Inc., an SEC registered investment adviser.