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Schwab: interesting failure that can cost clients $

Bogleheads • View forum - Investing - Theory, News & General - www.bogleheads.org
Quite by accident I found today that my "Cost Basis Method" was not what I thought it was and wanted it to be. That has cost me tens of thousands of dollars in Federal Tax liabilities over that past two years. The problem occurred when I transferred assets from one of mys account into another (in this case a "family trust") account.

Schwab policy does NOT include warning clients that the process of moving assets (e.g. transferring assets from one account to another) will NOT transfer the associated Cost Basis Accounting methods! In my case, Tax Lot Optimization associated with the assets in the original accounts was replaced by the "default" FIFO method. The result: potentially significant increased Federal tax liability on sale of assets.

GRRRR!
Date: Jun 4, 2014   


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