IRA: Understanding Rollovers
Interactive Brokers offers three IRA account types for US persons: Traditional IRA, Roth IRA, and Simplified Employee Pension plan IRA (a.k.a. SEP-IRA). Rollover transaction options may be available into or out of each account type.
The term IRA Rollover refers to several different movements of funds between US retirement accounts. Select from the list below for a brief description of each rollover type available, as well as the their guidelines.
IRA to Employer Sponsored Retirement Plan Rollover
Rollover Types
Funds withdrawn from an IRA and re-deposited into an IRA within 60 days may be eligible for treatment as a 60-day rollover contribution. If eligible, this movement of funds may qualify as an IRA withdrawal of funds without any penalty or taxes.
Tax Reporting - IBKR will report the withdrawal of funds as an IRA distribution and the re-deposit of funds as an IRA rollover contribution to the IRS. The IRS receives Form 5498 (IRA Contributions) and Form 1099-R (IRA Distributions). US investors do not include the Form 5498 with their tax filing, but do include the 1099-R. Click IRA Tax Reporting for details.
Funds received or withdrawn from an employer-sponsored retirement plan and deposited directly into an IRA. The 20% tax withholding of funds by the plan sponsor is waived when funds are rolled directly into an IRA.
Tax Reporting - IBKR will report the deposit of funds from an employer-sponsored retirement plan as an IRA rollover contribution to the IRS. The IRS receives Form 5498 (IRA Contributions). US investors do not include the Form 5498 with their tax filing. Click IRA Tax Reporting for details.
3. IRA to Employer Sponsored Retirement Plan Rollover
Funds moved directly from an IRA into an employer's retirement plan are deemed rollover contributions. Not all retirement plans accept rollovers from IRAs. Investors should consult the plan sponsor to determine eligibility.
Limitations & Guidelines
Distributed funds from an IRA may be rolled into another IRA only once every 12-month period. The rule applies to funds withdrawn from each separate IRA. The 12-month period begins the date funds are received, not on the date funds are deposited into another IRA. (See IRS Publication 590 for limited exceptions to the rule.)
Distributions from an IRA or Employer Sponsored Retirement plan may remain eligible for the tax-free rollover treatment only when contributed to another qualified plan within 60 days of receipt. Generally, funds re-deposited outside of 60 days are not tax-free. The withdrawal of funds is taxable. The deposit into another IRA is treated as a regular contribution. (See IRS Publication 590 for limited exceptions to the rule.)
Click here to return to the Retirement Account Resource page.
Disclaimer: IBKR does not provide tax advice. These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the US Internal Revenue Service.
Glossary terms:
Contacting IBKR Canada
Übersicht:
General Contact Information of IBKR Canada
What is the best way to contact IBKR Canada if I have a question ?
For general inquiries, send a webticket (secured email system) from the Message Center section in Client Portal. For trade problems or other time-sensitive issues, please contact us by chat or telephone at 877-745-4222. The IBKR Canada helpdesk is available Mon-Fri 8am-5:30pm ET. You may contact any of the IBKR offices outside of these hours. For contact information please see the Contact Us - Client Services section of our website.
How do I convert my advisor client account to an Individual IB account?
Übersicht:
Due to varying reasons, some clients of advisors no longer want their account to be managed by a Financial Advisor, but they wish to maintain an individual account at IB.
Information:
To transfer an FA Managed account to an Individual IB account, you must create a new Individual account where all aspects of the new account match those of the existing account (titles, tax ID's, trading permissions). Once the new account is approved, log into the old account's Account Management, select Funds Management -> Internal Transfers.
Note
- Only Cash can be internally transferred from an FA managed account to an Individual IB account. IB does not currently provide a facility for performing an internal account transfer when moving from an FA managed account to an individual account.
Can I upgrade my individual account to an advisor account?
Übersicht:
Clients often request that their individual accounts be converted to advisor accounts so they can take advantage of the advisor account structure.
Information:
Unfortunately, we cannot upgrade an Individual account to an Advisor Account. You must complete a new application, which can be accessed from our home page, by selecting Accounts -> New Accounts -> Advisor.
During the Advisor Account application, you will be given the opportunity to open a Trading Sub Account for yourself. If you do, and if you make sure that all aspects of this new Sub account (titles, tax IDs, trading permissions,e,mail addresses) match those of your existing individual account, you will be able to request a Positions and Funds move to your new account.
Please bear in mind:
- The Advisor Master account is only a shell account that is used to place trades on behalf of Advisor Client accounts.
- The Advisor Master account cannot hold positions.
- In order to trade, you must allocate trades to an Advisor Client account.
Why can't I use the same email address on my client account that is on my advisor account?
Übersicht:
When attempting to create sub accounts for themselves, many advisors cannot complete the process due to the client email address matching that of the advisor.
Information:
As a measure of client protection, IBKR will not allow the e-mail address of a client to match that of the Advisor.
A popular option is to create a new e-mail address for yourself, using a free service such as Gmail.
This will allow you to create the new sub account.
How do I move my current IBKR account underneath an advisor account?
Übersicht:
There are two possible methods which can be used to move an existing IBKR account underneath an advisor structure, dependent upon the situation of the account being linked.
Link Account to Advisor/Broker:
Interactive Brokers allows existing accounts to request their full account be 'linked' to a Friends Advisor, Non-Professional Advisor, a Professional Financial Advisor or a Fully Disclosed Introducing Broker. These linkages include all cash and positions and are available to accounts which are not currently Advisor or Broker clients. There are a number of checks which are performed which may prevent the linking of an account, such as, but not limited to, trading permission incompatibilities between the Advisor or Broker Master and the client account, commission schedule1 differences, etc.
To use this functionality, the user on the account requesting to be linked will need to log in to Client Portal and choose the User menu (head and shoulders icon in the top right corner) option followed by Account Settings. In the Configuration section click the gear icon next to the words "Create, Move, Link or Partition an Account". You will be presented with a variety of options, one of which is "Move my entire account to an account managed by an Advisor/Broker". Check this option and click Continue.
You will be prompted to enter the account ID and the title of the Advisor or Broker which you are attempting to link to. After submitting this information, users will be presented with any applicable agreements and will need to confirm the request.
Once confirmed, the advisor or broker will receive an email notifying them of the requested link. They will need to log into Advisor Portal to either accept or reject the request. IBKR will process accepted requests at approximately 3:00 p.m. every Friday.
1 Please note, accounts which are configured with an unbundled commission schedule will not be allowed to link to an Advisor or Broker account, unless the commission schedule is changed to bundled. In the Advisor and Broker account structures, commission schedules cannot be defined for client accounts. If not properly configured at the master level, changing your commission schedule to bundled may result in higher commission charges.
Transfer of Assets to Another IBKR Advisor Managed Account
For those clients which have an attached or additional account, in order to move under an Advisor, you must first open a new account directly under the Advisor, which duplicates the existing account. It is important to ensure that all aspects of the new account (account titles, tax IDs, trading permissions, etc.) match the existing account exactly. Client accounts can be created by the Advisor through Advisor Portal (click here for detail). Once the new account has been approved, clients will be able to log into Client Portal and select the Internal Transfer option as the Transfer Method in the Transfer Positions section of Transfer & Pay. Please keep in mind the following:
- The Advisor Master account is only a shell account that is used to place trades on behalf of Advisor Client accounts.
- The Advisor Master account cannot hold positions.
- In order to trade, you must allocate trades to an Advisor Client account.
Notes
- Transfers are processed on a daily basis, with the exception of US option expiration Friday.
- The new account should be allowed to close positions on the first day of transfer but will not be allowed to open positions as the new account will not have a previous day Equity With Loan value.
- The Cost Basis cannot be manipulated for Internal transfers, only for ACATs from outside sources.
How do advisors open client or sub accounts?
Übersicht:
There are two ways for an Advisor to open a client account. Both methods are initiated from within the Advisor Portal by navigating to Manage Clients -> Create and Link Accounts-> Create -> New.
Fully Electronic Invitation
With this method, the FA sends an invitation to the client. The client completes all information and submits for approval. The password is given to the client immediately.
Semi-Electronic Application
With this method, the FA completes the application on behalf of the client, then sends to the client for a signature. Once the account is approved, the password is mailed, via US Mail, to the client. While the application is pending, the FA can view and reprint from the Advisor Portal.
Note: If the FA Wants to open a sub account for himself
FAs are asked, when completing the FA application, if they would like to create a trading sub account for themselves. If they choose no, they may open an account at a later time, however they will be required to submit all new documents. They can submit a request to newaccounts@interactivebrokers.com to request that the documents used for the master account be applied to the sub account. To create a sub account they should complete an Electronic Invitation, accessible through the Advisor Portal. The trading sub account of the FA cannot be set up as an IRA account.
Are there any qualification requirements in order to receive Portfolio Margining treatment on US securities positions and how does one request this form of margin?
Übersicht:
In order to enabled for portfolio margining an account must be approved for option trading and must have at least USD 110,000 in net liquidating equity (USD 100,000 to maintain, once enabled). Account holders will also be required to acknowledge and sign the Portfolio Margin Risk Disclosure document and be bound by its terms.
Portfolio margining may be requested through the on-line application phase (in the Account Configuration step) or after the account has been approved. To apply once the account has already been approved, log into Client Portal and select the Settings and Account Settings menu options. In the Configuration section, click the gear icon next to the words "Account Type". There you may choose the portfolio margin treatment which will initiate the approval process. Please note that requests are subject to review (generally a 1-2 day process) and may be declined for various reasons including a projected increase in margin upon upgrade from Reg T to Portfolio Margining.
Why does IBKR not include Nigeria on the list of countries of residence for application purposes?
Übersicht:
Nigeria is one of several countries subject to US government sanctions, money laundering risks and/or other concerns which preclude IBKR from doing business with its residents. If a particular country is not represented on the application list, its residents are not eligible for application consideration. IBKR does not waive its restrictions in this regard.
