IRA: Understanding Rollovers

Interactive Brokers offers three IRA account types for U.S. 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 U.S. retirement accounts.  Select from the list below for a brief description of each rollover type available, as well as the their guidelines.

 

IRA to IRA Rollover

Direct Rollover

IRA to Employer Sponsored Retirement Plan Rollover

12-Month Rule

60-Day Period

 

Rollover Types

1. IRA to IRA Rollover

Funds withdrawn from an IRA and re-deposited into an IRA within 60 days may be eligible for treatment as a 60-day rollover contribution.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 - Equity Trust 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 2012 Tax Reporting for details.

2. Direct Rollover

Funds received or withdrawn from an employer-sponsored retirement plan and deposited directly into an IRA.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 - Equity Trust 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 2012 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.

Back to the top

 

Limitations & Guidelines 

12-Month Rule

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  The rule applies to funds withdrawn from each separate IRA.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.)

60-Day Period

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.)

Back to the top

 

 

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 q

Contacting IB Canada

Overview: 

General Contact Information of IB Canada

What is the best way to contact IB Canada if I have a question ?

 

For general inquiries, send a webticket (secured email system) from the Message Center section in Account Management. For trade problems or other time-sensitive issues, please contact us by chat or telephone at 877-745-4222. The IB Canada helpdesk is available Mon-Fri 8am-5:30pm ET. You may contact any of the IB offices outside of these hours. For contact information please see the Help & Contacts, customer service section. 

How do I convert my advisor client account to an Individual IB account?

Overview: 

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?

Overview: 

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?

Overview: 

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, IB will not allow the e-mail address of a client to match that of the Advisor.

What you can do, is create a new e-mail address for yourself, using a free service such as Yahoo!.

This will allow you to create the new sub account.

How do I move my current IB account underneath an advisor account?

Overview: 

There are two possible methods which can be used to move an existing IB 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 and Family Advisor account, 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 into Account Management. 

If your Account Management session has a series of menu items on the left: From the Account Administration menu, click Link Account to Advisor/Broker. 

If your Account Management session has a series of menu items on the top: Click Manage Account followed by the Add Accounts item.  You will then see the Link Account to Advisor/Broker tab.

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 Account Management to either accept or reject the request.  IB 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 IB 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 Account Management (click here for detail). Once the new account has been approved, clients will be able to log into Account Management and select the Transfer of Assets option as the Transfer Method in the Positions Transfer section of Funds Management.  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?

Overview: 

There are 3 ways for an Advisor to open a client account. All three methods are initiated from within the advisor's Account Management session and accessible by navigating to Manage Clients -> 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 customer. While the application is pending, the FA can view and reprint from the FA Account Management.

 

Paper Application
With this method, the FA or the client completes the application and mails / faxes it to IB for approval. Once the account is approved, the password is mailed, via US Mail, to the customer. 

 

 

Note: If the FA Wants to open a sub account for himself
The FA is 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 which were 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 FA Account Management. The trading sub account of the FA can not 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?

Overview: 

In order to enabled for portfolio margining an account must be approved for option trading and must have at least USD 100,000 in net liquidating equity. 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 Account Management and select the Trading Access and then Trading Configuration menu items. 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.  Also note that accounts approved for portfolio margining but maintaining net liquidating equity below the USD 100,000 threshold will remain subject to Reg T margining and not have portfolio margining applied until such time the net liquidating value of the account exceeds USD 100,000.


Why does IB not include Nigeria on the list of countries of residence for application purposes?

Overview: 

Nigeria is one of several countries subject to US government sanctions, money laundering risks and/or other concerns which preclude IB 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.  IB does not waive its restrictions in this regard.

Syndicate content