Letter of Instruction for Mutual Funds

You can redeem your mutual fund shares or transfer securities to another financial institution using a letter of instruction. This letter gives your financial institution the authority to sell or transfer shares on your behalf. Many financial institutions have a letter of instruction on their website that you can download if you don't want to compose the letter yourself. Once the financial institution receives your letter of instruction, it is legally obligated to carry out your instructions as soon as possible.

Account Owner Identification

Your letter of instruction must identity which institution is holding your shares or securities and which one is receiving them. If you are using the receiving institution’s letter of instruction, write down the holding company’s full name, branch address and telephone number. If you are composing the letter, include a statement that you are authorizing the transfer or redemption of the securities from your holding account to the receiving financial institution. Contact the receiving financial institution to see if it requires any documents in addition to the letter of instruction.

Identify the Securities

The holding company needs to know which shares or securities you are redeeming or transferring. List your full legal name to identify yourself as the account owner. If the account is jointly owned, list the legal name of each owner. For each mutual fund or security you want to redeem or transfer, write down the account number, the name of the share or security and the number of shares. If you are redeeming or transferring multiple funds or securities, provide the same information for each one.

Guarantee Your Signature

Each account owner needs to sign the letter of instruction and provide the correct Social Security number. Depending on the dollar amount of the redemption or transfer, the receiving institution may require you to have your signature medallion stamped. The medallion stamp guarantees that your signature was authenticated by one of the financial institution’s officers. Your brokerage firm or bank can provide this service. All account owners must bring a photo identification issued by a state or government agency. You also need to bring the letter of intent and the paper share certificates, if you have them.

Complete the Transaction

Send the original letter of instruction along with any other documents to the address of the holding institution. Send a copy of the letter of instruction to the receiving financial institution. Use a tracking service, such as certified mail or a commercial delivery service, so the original documents are delivered to the correct address. When the holding institution receives the letter of instruction, it will start processing your request. Unless there is a problem, the transfer or redemption of your shares or securities to the receiving financial institution should be completed promptly.

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About the Author

Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.

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