IRA: Required Minimum Distributions

Generally, regulations require traditional and rollover IRA owners to withdraw funds beginning at age 70 1/2, and every year thereafter.  Determining your Required Minimum Distribution (RMD) is significant while retaining an IRA, considering both your life expectancy and the IRA's fair market value.

The required amount for each eligible person is based on the December 31 IRA account value of the previous year and the IRA owners date of birth.  Your spouse's date of birth may also be a factor if your spouse is at least 10 years younger than you.  Interactive Brokers LLC provides several information resources to understand and calculate your RMD, including access to the on-line RMD Calculator.

Principal Trust Company's Role

January RMD Notification

Beginning RMD Distributions

Requesting Your RMD Withdrawal

Determining Your RMD

Calculating Your RMD 

Principal Trust Company's Role

Principal Trust Company serves as trustee of your retirement plan, providing administration and compliance service.  In addition, the plan trustee is required to notify you about your RMD.

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January RMD Notification

The Internal Revenue Service (IRS) requires the plan trustee, Principal Trust Company, to notify IRA owners about the RMD requirements by January 31 each year.  If you turn 70 1/2 this year, you are required to begin taking RMDs before April 1 of the following year.

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Beginning RMD Distributions

Eligible IRA owners must begin receiving withdrawals by December 31 of the year they reach age 70 1/2.  The first RMD withdrawal, however, may be delayed until April 1 of the following year.  

If you elect to delay the withdrawal, then please observe the following considerations:   (1) Two RMD withdrawals will be required the following year, the undistributed initial RMD and the new RMD.  (2) The new RMD will be slightly larger due to the December 31 market value's inclusion of the undistributed initial RMD.

Subsequent RMD withdrawals from your IRA must be distributed by December 31 to avoid a penalty tax.

Note:  Roth IRAs are exempt from the RMD rules during the IRA owner's lifetime.

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Requesting Your RMD Withdrawal

Log in to your Interactive Brokers account through Account Management to request an IRA withdrawal of funds.  IRA distribution forms available through Principal Trust Company will not authorize or execute a withdrawal from your account.

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Determining Your RMD

The IRS provides two Life Expectancy Tables in order to obtain the IRA owner's life expectancy.  Your IRA beneficiary election may play an important factor in determining your RMD. 

Calculating Your RMD

The RMD is determined by dividing your account's prior year December 31 value by your life expectancy factor as taken from the IRS life expectancy tables.   This RMD must be calculated for each of your IRA accounts.  Principal Trust Company updates the RMD Calculator each year with data from the IRS' current Life Expectancy Tables.  See also the IRS Publication 590 to review the tables. 

In addition, Principal Trust Company's January RMD notification includes a method for calculating your amount. 

Note: If you have multiple IRAs, then you may combine the total year end values and take the distribution from one, each, or any combination of your IRAs.

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Click here to return to the Retirement Account Resource page.

Disclaimer:  IB 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 adviser or refer to the U.S. Internal Revenue Service.

IRA: Rollover Rules & Conditions

 

This information is for general educational purposes only.  Individuals should consult with their financial adviser or legal counsel to determine how rollover regulations affect their unique situations.

Generally, an IRA rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan.  The contribution to the second retirement plan is called a rollover contribution.

This article outlines the types of IRA rollover transactions, rules and conditions, IB's Rollover Certification form, and rollover transaction details.  Select from list below for details:

Rules & Conditions

Rollover Certification

Eligible Rollover Transactions

Ineligible Transactions

  

Rules & Conditions

Prior to completing an IRA Rollover transaction, we recommend that you review the rules and conditions surrounding eligibility.  Interactive Brokers can accept as a tax-free transaction an eligible rollover distribution as defined under the Internal Revenue Code.  Included in this article is information about eligible transactions, as well as the Interactive Brokers  IRA Rollover Certification form.

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IRA Rollover Certification

Before accepting an IRA rollover transaction into an Interactive Brokers LLC IRA, we require that you review your eligibility for the rollover and certify your understanding of the rollover rules and conditions.  The IRA Rollover Form includes the IRA Rollover Certification

The Fund Transfers page within the Account Management lets you notify IB of an IRA Rollover deposit of funds into your account.  Select the Funding tab in the header link and choose Deposit Funds in the Transaction list.   In the Method list, select Direct Rollover.  Complete, sign, and return both forms to the Interactive Brokers address listed on the form.

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Rollover Transactions

Two types of IRA rollover transactions exist with different guidelines and delivery methods:

  1. Direct Rollover - a transfer of assets from an employer-sponsored retirement plan directly to an eligible IRA.  If you choose to receive the distribution first, then you may roll over the funds to the IRA within 60 days.
  2. Indirect Rollover - a distribution from an IRA paid to you, followed by a rollover into another IRA within 60 days.  The IRS allows an indirect rollover of each IRA's funds once during a twelve-month period.

(Note:  A distributions directly from one IRA trustee to another IRA trustee is a Trustee-to-Trustee transfer.  It is not affected by the twelve-month waiting period.)

For additional information about rollovers, visit Understanding Rollovers.  See also IRS Publication 590, Individual Retirement Arrangements (IRAs), pages 18-26 for more specific guidelines on moving retirement plan assets.

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Eligible Rollover Transactions

Almost any distribution from a qualified plan can be rolled over to an IRA.  Your retirement account may be eligible for one of the following eligible rollover transactions.

Traditional IRA or SIMPLE IRA to Traditional IRA Rollover

  • Funds or property deposited less than 60 days of receipt by the IRA owner from the previous IRA
  • During the preceding 12 months, no other distributions from the distributing IRA were rolled over
  • The assets involved in the transaction have not been rolled over in the past 12 months
  • Required Minimum Distribution satisfied (if over 70 1/2)
  • For SIMPLE IRAs, after two years from the first contribution

Roth IRA to Roth IRA Rollover

  • Funds or property deposited less than 60 days of receipt by the IRA owner from the previous IRA
  • During the preceding 12 months, no other distributions from the distributing IRA were rolled over
  • The assets involved in the transaction have not been rolled over in the past 12 months

Rollover or Direct Rollover from Qualified Plan into a Traditional IRA

  • Eligible participant (participant, spouse beneficiary, or former spouse due to divorce)
  • Funds or property deposited less than 60 days of receipt by the participant from the previous plan
  • Funds received from an eligible qualified retirement plan
  • Required Minimum Distribution satisfied (if over 70 1/2)
  • Consists of funds, property, or proceeds from the sale of property distributed from the qualified plan
  • All of the funds are eligible to be rolled over

Roth IRA to Roth IRA Rollover

  • Funds or property deposited less than 60 days of receipt by the IRA owner from the previous IRA
  • Required Minimum Distribution satisfied (if over 70 1/2)

Ineligible Rollover Transactions

Some funds distributed from a retirement plan are not eligible for rollover into an IRA.  The following transactions are not eligible rollover transactions.

  • Any portion of a distribution from a retirement plan not rolled over
  • Required Minimum Distributions
  • Distribution of excess contributions and related earnings
  • Retirement plan loan treated as a distribution
  • Hardship distributions
  • Distributions part of substantially equal payments (72-t)
  • Dividends on employer securities
  • Non-spousal death benefit distributions
  • The cost of life insurance coverage

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Click here to return to the Retirement Account Resource page.

Disclaimer:  IB 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 adviser or refer to the U.S. Internal Revenue Service.

Non-Guaranteed Combination Orders

A combination order is a special type of order that is constructed of multiple separate positions, or ‘legs’, but executed as a single transaction.  The legs of the combination may be comprised of the same position type (e.g. stock vs. stock, option vs. option or SSF vs. SSF) or different position types (e.g. stock vs. option, SSF vs. option or EFP).  It’s important to note that many combination order types, while submitted via the IB trading platform as a combination, are not native to (i.e., supported by) the exchanges and therefore may not be guaranteed by IB.  Accordingly, IB’s policy is to guarantee only Smart-Routed U.S. stock vs. option and option vs. option combination orders.

As combination orders which are not guaranteed are exposed to the risk of partial execution, both in terms of the quantity of legs and their balance, IB requires account holders to acknowledge the 'Non-Guaranteed' attribute at the point of order entry.  There are two methods for setting this attribute:

  • Method 1 - Users can select the Non-Guaranteed attribute in the Misc. section on the Order Ticket for a particular order
  • Method 2 - Users can add the Non-Guaranteed column to the Order Management section of the TWS

 

Notes:

  • Non-Guaranteed combination orders are not available for Financial Advisor allocation orders

 

The risk of such 'Non-Guaranteed' orders is illustrated through the example below:

Example

Assume the following quotes for a Stock vs. Stock combination order to purchase shares of Microsoft (MSFT) and sell shares of Appl (AAPL).

Current markets

MSFT - 26.30 bid, 26.31 offer
AAPL - 250.25 bid, 250.30 offer

A generic combination is created to buy 1 share AAPL and sell 1 share MSFT, the implied quote would be 223.94 bid, 224 offer.

The following order is entered:
Buy 200 AAPL, Sell 200 MSFT
Pay 224

Based on the current markets, the order would appear to be executable.

  • A buy of 200 shares of AAPL are routed with a 250.30 limit. Only 100 execute.
  • A sell of 200 shares of MSFT are routed with a 26.30 limit. No execution is received as the market moves to 26.29 bid.

With a Non-Guaranteed combination, the 100 shares of AAPL would be placed in the client account, even though no MSFT shares were executed.  The remainder of the combination order will continue to work until executed in its entirety or until it is canceled.

Information Regarding Multi-Account Voluntary CA Elections

概観: 

IB provides a tool for accounts maintaining a master account-sub-account structure which accommodates bulk election decisions for voluntary corporate actions initiated by the master account on behalf of its sub-accounts. The account types provided with this tool include Financial Advisors, Friends & Family, Introducing Broker (undisclosed) and Separate Trading Limit. The following article provides step by step instructions for use of the tool along with a list of common FAQs.

 

Note

With respect to a Stock Purchase Plan (SPP) offer, the corporate action election tool will require the submission of a VALUE of stock to purchase in the offer. As such, the corporate action election tool will reflect the maximum allowable stock value to purchase rather than an eligible share quantity.

 

 

1. Accessing the Tool

To access the Voluntary Corporate Action Election Tool, log into Account Management and click on the Tools icon located in the upper left hand corner of the screen. From the list of available tools, select Corp Actions. Then select the tab titled Sub Account Choice CA as depicted in the exhibit below.

 

 

2. Selecting an Event

An event list window will appear detailing, by row, those voluntary corporate actions associated with positions maintained in a sub-account where the deadline for provided election instructions has not yet expired. Each event will reflect the deadline, eligible position and the state of election actions, if any, taken to-date (i.e., No Allocations, Partly Allocated, Allocated). To change an existing election action or to provide allocation instructions to an event not previously acted upon, click on the Change or Allocate link located in the Action column as displayed below

 

3. Submitting Instructions

Once an action has been specified the election screen will appear, providing summary information regarding the nature of the event, the method for submitting elections and detail as to the effective date and deadline. Located below the event information is the position detail aggregated across all sub-accounts, including the following:

  • Total position eligible for allocation
  • Current unallocated position
  • Revised unallocated position

 

 

The Voluntary Corporate Action Election Tool offers two methods for submitting election instructions:

  • Submit a quantity of shares per specified account
  • Submit a percentage of shares to allocate accross all accounts

Examples for each of these methods are provided below:

A. To submit shares or value for a specific account

Select the account from the drop-down selector located to the left of the Total eligible position detail

 

Under the column titled New, submit the specific number of shares you wish to submit to the given election for the selected account.
 

 

Submit Save 

 

B. To submit a percentage of shares to allocate across all accounts

Select ALL from the drop-down selector located to the left of the Total eligible position detail

Under the column titled %, submit the percentage of shares you wish to submit to the given election

 

All new percentage allocations will be applied to the Revised Unallocated portion of the shares and will be added to any previous allocation.

 

 

Submit Save

 

IMPORTANT NOTE: If one submits shares using a combination of share quantity and then percentage, any accounts designated for allocation on a per share quantity will also then have their unallocated shares submitted on the same percentage basis as the remaining accounts. If this is not your intent you will need to revisit those accoutns and adjust their share allocations accordingly.

 

To reduce a previously submitted percentage allocation

  1. Select "Remove All Allocations"
  2. Enter a new % allocation for All accounts

Note: If elections have been made on a per-account basis, selecting "Remove All Allocations" will remove all account-specific allocations as well.

 

Frequently Asked Questions

How do I know if the election has been accepted by IB?

After an election has been submitted and the user selects "SAVE" from the election screen, IB will create a new ticket, available in the Message Center. This ticket will detail whether IB has accepted and acknowledged a submitted election. The ticket will also detail the election which has been made for each sub-account. In the event the election is incorrect, a user may re-enter the election screen prior to the IB deadline in order to update the elections.

Sample unread ticket - the Summary will display as Voluntary CA Election

 

Sample ticket detail reflecting the elections which were submitted

 

 

Sample ticket detailing that IB has acknowledged receipt and will submit elections to the depository or agent

 

 

How is the percentage allocation processed?

Each account will have the entered allocation applied to the eligible, unallocated shares.

Assume there are 4 sub-accounts with the following holdings:

Account Eligible Shares Unallocated Shares
A 200 200
B 100 100
C 100 100
D 50 50

 An election for 50% of the shares is submitted to tender shares to an offer. The allocation will be applied as follows:

Account Eligible Shares Unallocated Shares Allocated Shares
A 200 100 100
B 100 50 50
C 100 50 50
D 50 25 25

 

Can both methods be used on the same voluntary offer?

Yes. Both allocation methods may be used on the same offer. This will allow a user to easily allocate a percentage of all shares plus all eligible shares for a specific account.

 

If I submit an account specific election and a percentage allocation for all accounts, how will the election be made?

Percentage allocations are posted only to the eligible, unallocated share quantities. Therefore both the specific and percentage allocations will be allocated.

Assume there are four sub-accounts with the following holdings:

Account Eligible Shares Unallocated Shares
A 200 200
B 100 100
C 100 100
D 50 50

If an election is made to tender 50 shares in Account A the elections will be as follows:

Account Eligible Shares Unallocated Shares Allocated Shares
A 200 150 50
B 100 100 100
C 100 100 100
D 50 50 50

If an election is then made to allocate 50% of ALL remaining shares, the elections will be as follows:

Account Eligible Shares Unallocated Shares Allocated Shares
A 200 75 125 (50 + 75)
B 100 50 50
C 100 50 50
D 50 25 25

 

How will IB treat fractional shares as a result of using a percentage allocation?

If the election quantity is a fractional share as a result of the percentage allocation, IB will truncate the resultant quantity and submit the remaining share to the default allocation.

Assume there are 3 sub-accounts with the following holdings

Account Eligible Shares Unallocated Shares
A 100 100
B 100 100
C 75 75

If an election of 50% is submitted, each account will have 50% of the eligible, unallocated shares elected on.

Account Eligible Shares Unallocated Shares Allocated Shares
A 100 50 50
B 100 50 50
C 75 38 37 (37.5 truncated to 37)

 

Does it matter the order in which I allocate to the accounts?

If a user first allocates positions as a percentage using the All Accounts function and then selects an individual account, the user may override the percentage allocation for the individual account. In this manner, a user may elect 50% of all unallocated eligible shares to be allocated and subsequently reduce the election in Account A to fewer than 50% by making a change in the account specific allocation.

 

Understanding the 2009 Gain/Loss Summary Worksheet

IMPORTANT NOTE: This article has been customized for use by individual US taxpayers investing in securities for information purposes only.  Persons are encouraged to consult a qualified tax professional with the preparation of tax returns.  IB does not provide tax advice.  Traders or dealers in securities, for whom other tax treatment applies, may find the worksheet helpful.  The methodology used to determine the yearly gain or loss, however, differs.  Traders electing the mark-to-market accounting method may consult IRS Instructions for Form 4797, page 2.

The 2009 Gain/Loss Summary Worksheet calculates the gain or loss for your securities bought and sold from January 1 through December 31 utilizing the Internal Revenue Service (IRS) guidelines.  Every sell trade executed appears, including short sells, on a trade-date basis.  Not all securities, however, are eligible for inclusion.  For additional information, see the following article categories.


Below we have categorized information about this year's "Worksheet" within the IB Knowledge Base.  Each article provides more details to assist with your understanding of this tool.

 

 

IRS Circular 230 Notice: 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 federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

2009 Gain/Loss Summary Worksheet: Considerations

概観: 

Interactive Brokers has taken the time to ensure that the gain/loss figures are calculated according to your elected tax methods.  Sell transactions are offset versus the original purchase details available.  Consider the following limitations and issues as you review the Worksheet.

Corporate Actions

For each of the transactions labeled corporate actions, adjustments under to the Worksheet in formation may be required.  The IB Worksheet does not make those adjustments.  Activity classified by the issuer as a sale may be included on the Worksheet, the 1099-B's box 2, and under the Annual Statement’s Corporate Actions section. 

Transactions designated as corporate actions include those processes that impact shareholders by Publicly Traded Companies and result in a material change.  Over 50 voluntary or mandatory actions fall in this category.  Some of the most common processes which may be reported include:   

► Acquisition                              ► Merger

► Captial Reduction                   ► Reverse Split

► Conversion                             ► Rights Issue

► Dividends or Interest              ► Stock Split

 

Option Assignments/Exchanges/Expirations

Options not considered to be Section 1256 contracts appear.  Special rules apply for assignments and exchanges.  The IB Worksheet makes adjustments.  The option transaction’s proceeds do NOT get included on the Worksheet next to the actual trade.  In accordance with IRS guidelines, IB includes the proceeds with the assigned stock.  The IRS Publication 550 on page 57 describes in detail the adjustments required for both the option writer and holder. 

If an option expires during the year, IB enters the expiration date under column (c), Date Sold, 0.00 under column (d), Sales price, and assigns “Ep” under the Codes column.  The gain or loss treatment differs for the option writer and holder.  See IRS Publication 550 for details.

 

Short Sales

Securities sold during the year that you do not own are short sales.  The sale proceeds are included in the 1099-B, box 2, and on the Worksheet, regardless of the year in which the sale is covered or closed.  This may cause a difference in the figure reported for your tax purposes versus the IB Worksheet and the 1099. 

Determination of gain or loss takes place when the security covered is purchased at a later date.  The IB Worksheet makes adjustments for current and prior year sales.  See IRS Publication 550, page 55 for details.

 

Tax Basis Declaration

The default tax basis method for IB accounts is First In, First Out (FIFO).  This matches the the first assets purchased with most recently sold assets for gain and loss tax purposes.  In January 2009, we added an option to allow modification of the tax basis method.  Customers may elect two additional methods, Last In, First Out (LIFO) or Maximize Losses (ML).

On the Worksheet, trades using the default FIFO method do not have an identification code.  For trades using the methods LIFO or Maximize Losses, the following codes apply: 

First In, First Out (FIFO), code = no code appears

Last In, First Out (LIFO), code = LI

Maximize Losses, code = ML

Note:  The tax basis method may be changed for trades going forward through Account Management.  Select Report Management and choose Tax Basis Declaration.

 

Transferred Accounts

The cost of a transferred security reflects the closing price value and date acquired "as of" the transfer settlement date.  An exception applies for cost and date acquired details manually entered by you within Account Management before January 1.  The IB Worksheet makes adjustments for these entries.

If you were unable to complete the online adjustment, then contact your former financial firm for the original cost basis. 

Note:  IB provides the ability through Account Management to update the basis by December 31.  Updates reflect on all future statement records.  Select Report Management and choose Position Transfer Basis.

 

Wash Sales

Stock or security trades sold at a loss, but purchased again within 30 days may be considered wash sales.  The IB Worksheet does identify wash sale trades, beginning in tax year 2009.  Trades considered wash sales are identified by the code “WS” (disallowed loss form wash sales). For more details on trades considered wash sales or the adjustments, see IRS Publication 550, page 56.

 Click here to go back to the main 2009 Worksheet article.

 For information about when all tax forms are made available, go to our Tax Information and Reporting page, then click the Reporting Dates tab.

IRS Circular 230 Notice: 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 federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

 

 

 

Tax Treaty Benefits

概観: 

Income payments (dividends and payment in lieu) from U.S. sources into your IB account may have U.S. tax withheld.  Generally, a 30% rate is applied to non-U.S. accounts.  Exemption from the withholding or a lower rate may apply if your home country has a tax treaty with the U.S.  Complete the applicable Form W-8 to find out your status. 

Background: 

Tax Treaties*

U.S. tax treaties with some countries have different benefits.  Legal tax residents of the following countries may be eligible for the treaty benefits.  Below is a list of the tax treaty countries.  Benefits vary by country.

Australia Czech Republic India Lithuania Sweden
Austria Denmark Indonesia Poland Switzerland
Bangladesh Egypt Ireland Portugal Thailand
Barbados Estonia Israel Romania Trinidad & Tobago
Belgium Finland Italy Russia Tunisia
Bulgaria France Jamaica Slovak Republic Turkey
Canada Germany Japan Slovenia Ukraine
China, People's Rep. Of Greece Kazakhstan South Africa United Kingdom
Commonwealth of Ind. States Hungary Korea, Rep. of Spain Venezuela
Cyprus Iceland Latvia Sri Lanka  

*Country list as of April 2009

 

Refer to IRS Publication 901 for details on withholding rates for your tax residence country and your eligible benefits.

 

Which Tax Form Should I Select?

概観: 

3 simple questions can help you choose a tax certification form.   Read the questions and select the form.  For more detailed help, see Tax Information & Reporting.

Question # 1:      Are you a U.S. Person or a U.S. Entity?

• U.S. Citizen • U.S. Business or Organization
• U.S. Green Card Holder • U.S. Domestic Trust
                                       • U.S. Legal Resident

If the answer is YES, complete Form W-9

If the answer is NO, go to # 2.

Question # 2:      Do you have a U.S. Visa?

 

• H-1B Visa Holder • TN Visa Holder         
                                         • O-1 Visa Holder

If the answer is YES, find your status by the "substantial presence test." See More U.S. Legal Resident Info 

If the answer is NO, go to # 3.

Question # 3:      Are you a Legal Resident or Entity of another country?

                                      *Question does Not apply to U.S. Citizens/Entities or Green Card Holders

• Permanent Home Outside of U.S • Entity Formed Outside of U.S.
                                      •Business or Organization formed outside of U.S.

If the answer is YES, complete Form W-8  (U.S. Citizens, Green Card Holders, and Entities still complete the W-9.)

NOT SURE because you work, live, or study in the U.S. then, see More U.S. Legal Resident Info 

 

Disclaimer:  IB 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 adviser or refer to the U.S. Internal Revenue Service.

Certify Your Tax Status

概観: 

Filling out a tax certification form is required to open an IB account.  The forms confirm your tax status in relation to the United States.  Information provided by you may lower or exempt the U.S. tax withholding on your account.

Background: 

This article will help you to:

►Choose the correct certification form                            ►Find your tax treaty benefits

►Fill out and submit your form online                              ►Answer tax certification questions

 

 

 

 

Which Form Do You Pick?

Tax Treaty Benefits

Management of account activity differs for each account type.  IB is a U.S. broker and must follow U.S. guidelines.  3 simple questions help you choose the right form

Some countries have a tax treaty with the U.S.  Find out if you benefit from a lower tax-withholding rate. Tax Treaty Benefit Info

Filling Out The Form

Tax Certification – FAQ’s

The certification form is direct.  Supply basic account information on the true owner of the assets or entity.  Select  W-9 Instructions or W-8 Instructions for help. Seek professional advice for tax questions.  These common questions and answers may help you make an informed decision.  Tax Certification - Frequently Asked Questions

 

 

 

Disclaimer:  IB 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 U.S. Internal Revenue Service.

 

 

How and When to Use a Direct Rollover

概観: 

This information is for general educational purposes only.  Individuals should consult with their financial adviser or legal counsel to determine how rollover regulations affect their unique situations.

Generally, an investor changing jobs or leaving the workforce may utilize either a Direct Rollover election to continue their retirement savings outside of their employer-sponsored retirement plan.   Assets distributed directly to your IRA from the retirement plan may qualify as a Direct Rollover.

What is a Direct Rollover?

The Direct Rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan, including an IRA.  The contribution to the IRA is called a rollover contribution.  The Direct Rollover method transfers the assets directly from the retirement plan (and not to the IRA owner) into the investor's IRA, avoiding the 20% mandatory IRS withholding.  This option to transfer retirement assets has no age limitations.

Eligible retirement plans include:

  • Employer's qualified pension, profit -sharing, or stock bonus plan
  • Annuity plan
  • Tax sheltered annuity plan (section 403(b) plan)
  • Governmental deferred compensation plan (section 457 plan)

Who do you contact first? 

Contact your retirement plan administrator or the human resources office for eligibility and requirements.  The plan administrator is required to provide a reasonable direct method of asset transfer.   Completion of an IRA Rollover Form provided by the administrator may be required, in some cases.  In other cases, the plan accepts an IRA Rollover Form supplied by your IRA's broker.  Therefore, it is important to check with the plan administrator.

Initiating your Direct Rollover through IB 

For those transfers that require a broker-supplied IRA Rollover Form, Interactive Brokers provides a convenient IRA Rollover Form.  Interactive Brokers will forward the request to the plan administrator or broker for processing.  Funds may be transferred by either wire transfer or check directly to Interactive Brokers.

Before accepting an IRA rollover transaction into an IRA, we require that you review your eligibility for the rollover and certify your understanding of the rollover rules and conditions.  The IRA Rollover Form includes the Rollover Form and an IRA Rollover Certification Form.

The Fund Transfers page within the Account Management lets you notify IB of an IRA Rollover deposit of funds into your account.  Select the Funding tab in the header link and choose Deposit Funds in the Transaction list.   In the Method list, select Direct Rollover.  Complete, sign, and return both forms to the Interactive Brokers address on the form.

Contact Customer Service with any additional questions.

 

 

In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this article was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.

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