IRA Charitable Distribution FAQs
Overview:
IRA owners 70½ or older may request an IRA distribution direct to a “qualified charity.” The following FAQs provide basic answers on Qualified Charitible Distributions.
Background:
Charitable Distributions
What is a Qualified Charitable Distribution (QCD)?
What is a "qualified charity?"
Where can an IRA owner find additional information on QCDs?
Withdrawal Processing
Can IB customers submit a QCD withdrawal online?
What amount may be withdrawn? Why?
Where are the funds disbursed?
Does the distribution count towards the Required Minimum Distribution (RMD) amount?
Eligible IRA Accounts
Is the Charitable Distribution allowed from all IRAs held at IB?
Are the QCDs allowed from other IRA and retirement plans not held at IB?
QCD Tax Reporting
How is the QCD reported to the IRS?
Can any taxes be withheld from the distribution?
Do federal taxes have to be paid on the distribution?
Does a state or municipal tax have to be paid on the distribution?
Charitable Distributions
What is a Qualified Charitable Distribution (QCD)?
A distribution from an eligible IRA to an eligible charitable organization from an individual 70 ½ or older
How to determine if a charity can receive the QCD?
The IRS artcile "Search for Charities" and Online IRS Publication 78, Cumilative List of Organizations is a list of organizations eligible to receive tax-deductible charitable contributions.
Where can an IRA owner find additional information on QCDs?
IRS Publication 590
Withdrawal Processing
Can IB customers submit a QCD withdrawal online?
Yes, but not through Funds Management. Requests are processed manually. The withdrawal request must be initiated by the IRA owner through a the Customer Service Message Center located within Account Management menu. Click the Message Center icon in the menu's left pane to access secure Message Center. You may submit the request directly to IB Customer Service using inquiry tickets and track the status.
What amount may be withdrawn? Why?
IB will process the tax-free QCD of any available amount from an eligible IRA. Why? Although the gifts must not exceed $100,000 per year to retain QCD status, gifts may exceed this limit.
Where are the funds disbursed?
Funds are made payable to the IRS qualified charity and sent direct to the charity. Only funds disbursed directly to the charity can be designated as a QCD.
Does the distribution count towards the Required Minimum Distribution (RMD) amount?
Yes
Eligible IRA Accounts
Is the Charitable Distribution allowed from all IRAs held at IB?
No, see the list below. IRA owners should contact a qualified tax advisor about how to preserve QCD tax benefits. Not all distributions are created equal. A tax advisor will be able to assess an IRA owner’s best choice.
Traditional IRA > YES
Rollover IRA > YES
Roth IRA > YES
SEP IRA > NO
Education IRA > NO
Are the Charitable Distributions allowed from other IRA and retirement plans not held at IB?
No, not directly. Retirement plans, employer sponsored SEP IRAs, and Simple IRAs (account classifications not held at IB) are not eligible for a QCD election. IRA owners may be eligible to rollover assets from these plans into a traditional, rollover, or Roth IRA to take a charitable distribution. IRA owners should contact a qualified tax advisor or their retirement plan administrator.
QCD Tax Reporting
How is the QCD reported to the IRS?
Principal Trust Company, the IRA plan administrator for all IB IRAs, reports the distribution on Form 1099-R when issued.
Can any taxes be withheld from the distribution?
No.
Do federal taxes have to be paid on the distribution?
Generally, federal taxes are not paid with QCDs. But distributions in excess of the IRS limit may be subject to income tax. IB recommends that customers contact a qualified tax advisor.
Does a state or municipal tax have to be paid on the distribution?
Contact your tax advisor or local tax authority on state and municipal requirements for the distributed amount.
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.
ACATS Transfer Guide (US brokerage account transfers)
ACATS Transfer Guide
Introduction
Understanding the basic facts about transferring accounts between US brokerage firms can be help to avoid delays. Through this article and other Knowledge Database resources, Interactive Brokers seeks to assist with your incoming and outgoing ACATS requests.
US brokerage firms utilize a standardized system to transfer customer accounts from one firm to another. Known as the Automated Customer Account Transfer Service or ACATS, the process allows assets to move seamlessly between brokerage firms in a unified time frame. ACATS transfers are facilitated by a third party, the National Securities Clearing Corporation (NSCC), to assist participating members with timely asset transfers.
ACATS Transfer Benefits
The majority of assets may be transferred between US brokerage firms and some banks through ACATS. This standardized system includes stocks, US corporate bonds, listed options, unit investment trusts, mutual funds, and cash. Information on assets eligible for transfer is provided at "Assets Eligible..." Though impacted by multiple factors and time constraints, the accepted or rejected transfers finalize within 10 business days in most cases.
Navigating The Process
4 simple steps of the ACATS process will help you understand the flow and minimize delays. Familiarizing yourself with the transfer process helps to ensure a successful transition.
1. Incoming or Outgoing
Incoming ACATS Transfers
The financial institution that is receiving your assets and account transfer is known as the "receiving firm." Investors always work with and through the "receiving firm" to move full or partial account assets into a new broker.
Contact the "receiving firm" (Interactive Brokers) to review the firm's trading policies and requirements. You should verify that your assets are eligible for trading at the "receiving firm" before initiating the transfer request. Not all ACATS transferable assets are acceptable for trading at every brokerage firm.
Outgoing ACATS Transfers
All outgoing ACATS transfers, full or partial, must be approved by the "delivering firm." Investors, however, should work with and through the "receiving firm" in order to begin the the transfer process or to status the progress of the request.
2. Initiating Your Transfer
Investors must always begin the ACATS transfer with the "receiving firm." An ACATS transfer form or Transfer Initiation Form (TIF) must be submitted. The "receiving firm" takes your reqeust and communicates with the "delivering firm" via ACATS. The process begins with this request for transfer of the account.
For your Interactive Brokers Account, the transfer is usually submitted online. Video instruction on submitting the transfer is provided at "How to deposit funds via a full ACATS/ATON Transfer." or through Step-by-step instructions.
Note: Outgoing account transfers from your IB account should be directed to the other broker. Your request will be submitted to IB from the other broker through the ACATS electronically.
3. What to Expect
Your Account
Brokers ensure the safety and security of transfer requests by only authorizing requests between open accounts that meet the following criteria:
- Same Account Title
- Same Tax ID Number
- Same Account Type
Transfer Approval
Ultimately responsible for validating the transfer, the "delivering firm" may accept information from the "receiving firm" correcting data originally entered. Approved or validated requests result in the delivery of positions to the "receiving firm" for their acceptance. Assets may not be accepted by the "receiving firm" for the following:
- Non-marginable or Margin (credit) violation
- Not Tradable
- DTC Chill
Note: The most common reasons for ACATS rejections are outlined by clicking here.
Processing Time-frame
The processing time for each transfer request is fixed. In general, approved transfers complete within 4 to 8 business days. Almost all transfers complete within 10 business days. Each firm is required to perform certain steps at specific intervals in the process. Feel free to review the Full ACATS transfer process flow.
Fees
While Interactive Brokers does not charge a fee to transfer your account via ACATS, some brokers do apply a fee for full and partial transfers. Prior to initiating your transfer, you should contact the "delivering firm" to verify any charge.
4. Who To Contact For Help
Interactive Brokers Customer Service stands poised to assist with your incoming ACATS transfer reqeust. Click here for Customer Service contact resources.
Note: Outgoing or ACATS transfers sending accounts to another broker should be directed to the "receiving firm." Their Account Transfer Group will work with Interactive Brokers directly to complete your outgoing request.
Year End Statement & Report Comparison
Overview:
The Interactive Brokers Year End Reports provide an activity review for US persons and US entities. The various account statements provide the transaction details as the basis for each report. Each of the standard reports spans the time period from January 1 through December 31.
Some reports, such as the Gain/Loss Summary Worksheet, may consolidate transactions and calculations. For the sake of conserving volume, trade activity may be combined. The account statements include all activity. For your convenience and to assist with your reconcilation, customized statements permit activity displays suitable for your personal needs (see the tab "Customized Templates" for details).
All US tax reports include the total figures as required under the US tax laws.
Non-US Persons and Entities
Income paid from US sources to non-US persons and entities may find this comparison helpful. IB is required to withhold US taxes at a rate of 30% on payments of US source stock dividends and substitute payments in lieu. Both the withholding and the income is reported on the US tax Form 1042-S.
For additional information about how IB handles non-US persons and entities, select this Tax Information and Reporting link and choose the tab Non-US Persons and Entities.
Year End Reports (For Trading) Comparison shown below identifies the most common transaction types which appear on the year end reports. Not all activity is included on each report.
| Year End Reports | Stock | Bond | Equity & Index Option | Single Stock Futures | Futures | Forex |
| Form 1099 | Sell | Sell | - | - | Gain/Loss | - |
| Form 1042-S | - | - | - | - | - | - |
| Annual Statement | Buy/Sell Gain/Loss | Buy/Sell Gain/Loss | Buy/Sell Gain/Loss |
Buy/Sell Gain/Loss |
Buy/Sell Gain/Loss |
Buy/Sell Gain/Loss |
| Gain/Loss Worksheet |
Cost/Sell Gain/Loss | Cost/Sell Gain/Loss | Cost/Sell1 Gain/Loss1 | Cost/Sell Gain/Loss | - | - |
| 1256 Worksheet |
- | - | Gain/Loss5 | - | Gain/Loss | - |
NOTES: (1) Only cash settled; (2) Gain/Loss Worksheet was first published by IB with tax year 2007. Worksheets for prior years are not available. IB did provide gain and loss data on the Annual Statements; (3) The 1256 Worksheet was first published by IB with tax year 2008; (4) Option transactions are not 1099 or 1042-S reportable transactions. In accordance with the IRS guidelines, IB excludes the activity from the tax reports; (5) Only broad-sed index options appear on the 1256 Worksheet
Year End Reports (For Income) Comparison shown below identifies the most common types of income which appear on the year end reports. Not all income is reportable on a 1099 or Dividend Summary.
| Year End Reports | Dividends | Credit Interest | Debit Interest | Accruals | Pay In Lieu Credit | Pay In Lieu Debits | Fees |
| Form 1099 | Yes | Yes | No | No | Yes | No | No |
| Form 1042-S | Yes | Yes | No | No | Yes | No | No |
| Annual Statement | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Dividend Summary | Yes | No | No | No | Yes | Yes | No |
| Gain/Loss Worksheet | No | No | No | No | No | No | No |
| 1256 Worksheet | No | No | No | No | No | No | No |
NOTES: (1) US Tax Form 1042-S is provided to non-US persons/entities, along with the Dividend Summary. The Tax Form reports interest, dividends, substitute payments in lieu, and US tax withholding from US securities; (2) For US persons/entities, the Dividend Summary may list dividends as potentially eligible for treatment as “Qualified” based on the holding period. IB does not report this on the 1099-DIV or to the Internal Revenue Service; (3) Debit transactions are not 1099 or 1042-S reportable transactions. In accordance with the IRS guidelines, IB excludes the activity from the tax reports; (4) Exchange, market data, and activity fees
Can I contribute to an IRA if I already have a retirement plan through my employer?
Yes. You can contribute to a Roth IRA or Traditional IRA regardless of whether or not you have an employer-sponsored plan. While participation in a retirement plan does not change how much you can contribute to an IRA, it can affect whether or not you are eligible to deduct your Traditional IRA contributions on your tax return.
IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is 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 does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.
Can I transfer IRA or other retirement plan assets?
Yes, you can transfer assets from trustee-to-trustee or as a rollover. Refer to the Understanding IRA Rollovers topic on the IB Knowledge Base for more information.
Can I open an IRA margin account at IB?
Yes, an IRA margin account allows you to immediately trade on your proceeds rather than waiting for your proceeds to settle, trade assets in multiple currencies and trade limited option spread combinations. IRA margin accounts have certain restrictions compared to regular margin accounts and borrowing is never allowed in this account. You may also upgrade an IRA Cash Account in Account Management on the Trading Configuration page, available in the Trading Access menu. Refer to the Reg T IRA section under the Account Types tab of the Trading Configuration page and the US Stock and Index Options tab under the Margin page on IB’s website for more information. You may also upgrade an IRA Cash Account on the Trading Configuration page in Account Management.
IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is 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 does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.
Am I eligible to convert my IRA?
You are eligible to convert to a Roth IRA if your modified AGI for the year that you convert does not exceed $100,000. Individuals who are married filing separate returns are eligible only if they live apart for the full year. For 2010, the IRS has eliminated these requirements and added the option to split the conversion income (and the tax due) over two years with half reported in 2011 and in 2012, unless you elect to report the full amount in 2010. We strongly suggest you consult your tax advisor before you convert an IRA.
IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is 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 does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.
Are distributions from a Traditional IRA taxable?
Yes, generally IRA distributions from a Traditional IRA are taxable in the year you withdraw them. Further, distributions from Traditional IRAs that you include in income are taxed as ordinary income subject to regular income tax rates. Distributions may also be fully or partially taxable depending on whether your IRA includes any nondeductible contributions. Refer to IRS Publication 590 and the Instructions to IRS Form 8606, Nondeductible IRAs for further information on whether distributions are taxable.
IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is 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 does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.
Can I contribute to both a Traditional and Roth IRA?
Yes, but the combined contribution limit is the same as the contribution limits that apply for both Traditional and Roth IRAs. Your total contribution limit cannot exceed your contribution limit for the year, including any catch-up contributions. However, if your MAGI is above a certain amount the contribution limit for a Roth IRA may be reduced.
IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is 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 does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.
Can I have a joint IRA account?
No, joint IRAs are not permitted. An IRA must be established in the name of the owner with their own tax identification number. An IRA is an “individual” retirement plan which allows the designation of beneficiaries, spouse or a non-spouse.
IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is 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 does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.
