SIPP Overview
What is a SIPP?
A SIPP account is a pension account that allows customers to control their retirement savings and where they are invested. SIPPs provide customers with more flexibility and self control over their savings, and are available to all UK residents between the ages of 18 and 75. Customers who are employed or self-employed may contribute up to 100% of their earnings (up to £235,000) in any one tax year. Further they allow retired and unemployed customers to invest up to £3,600 per year. You can trade financial products, property and other items in a SIPP.
Interactive Brokers (UK) Limited does not accept SIPP’s outright, rather it does accept a SIPP Administrator of a SIPP to open a master account. Afterwards, a SIPP Administrator's clients can open sub accounts and trade their SIPP through Interactive Brokers (UK) Limited.
For more information about SIPP’s in the UK, refer to the HM Revenue & Customs website www.hmrc.gov.uk
Can I open a SIPP account with Interactive Brokers LLC (US) or (Hong Kong)?
No, the SIPP Administrator account and its sub accounts can only open an account with Interactive Brokers (UK) Limited.
Can I trade property and other acceptable investments through my SIPP at Interactive Brokers (UK) Limited?
You can only trade regulated financial products through your SIPP that is held with us.
What is a SIPP Administrator?
A SIPP Administrator is a regulated company with the Financial Services Authority in the United Kingdom that acts as the trustee of the SIPP. Further it provides various administrative duties on behalf of the SIPP e.g., reporting to HM Revenue & Customs.
How do I get my SIPP Administrator to open a master account?
Refer to our Interactive Brokers (UK) Limited website www.interactivebrokers.co.uk under Account, then under SIPP. From here a SIPP Administrator can open a master account (at no cost). Alternatively you can contact an Interactive Brokers (UK) Limited sales representative.
What qualifies a SIPP Administrator to open a master account?
We only accept UK registered companies with the Financial Services Authority which are authorised SIPP Administrators that are in good standing and adhere to our terms and conditions.
Is there a cost to open a master account?
No, unless the master account wants to view market data then fees apply.
Can anyone trade a SIPP sub account with Interactive Brokers?
Only UK residents and individuals between the ages of 18 and 75 who have good or extensive knowledge of any product they wish to trade and that we support, prior execution of 100 or more trades (of any product) and will make a minimum deposit of $5,000 or equivalent in stock.
Can I trade on margin (leverage)?
No, all SIPP sub accounts can only trade in a cash account.
What is a cash account?
A cash account only allows a sub account to trade stocks, bonds, equity options, futures, futures options, single stock futures (SSFs), ETFs, forex and warrants. An individual can only deposit one base currency that Interactive Brokers supports, but can trade products denominated in other currencies after using a Forex transaction to acquire the currency. You must wait for the Forex trade to settle (two business days following trade date) before the currency is available for trading. Cash accounts can only trade the following order types: long stock (no shorting), long calls or puts, covered calls, protective puts, short naked puts and call spread, put spread.
What are the costs to open a sub account?
Initial deposit $5,000 + $10 minimum brokerage fee per month + IB brokerage fees (applicable) + Market data fees (if applicable) and other costs may apply.
Can I trade my ISA through Interactive Brokers?
No, we only accept SIPP accounts.
Does Interactive Brokers give advice in trading within your SIPP?
No, Interactive Brokers give no trading advice as it is a non discretionary broker.
Do you accept cheques to fund my SIPP?
No we only accept wire transfers or positions (FREE of PAYMENT).
What is a FREE of PAYMENT transfer?
The transfer of securities for which there is no need for a cash exchange. Rather the securities are already paid up in full.
Can I transfer physical shares (FREE of PAYMENT) in my sub account?
No we only accept dematerialized shares.
How many users can trade my SIPP sub account?
Only one.
Cash Accounts: Does a cash account require completion of a W8 form?
If you are a non-US person or entity, Interactive Brokers is required to have a valid form W8 certifying your country of tax residence at the time of application. You may update your W8 form at any time in Account Management.
Adding (non-employee) users to an individual account
Overview:
Individual account holders have the ability to add multiple users to their IB account. The account holder may wish to add a second user registered under their own name for the purpose of opening two TWS sessions simultaneously (one for normal access and the other for connecting via an API). The account holder may also provide access to up to 15 (non-employee) individuals, such as a family members, pursuant to a Limited Power of Attorney agreement. In addition, each of these individuals may also be provided with a second user access.
In each case, the additional user will be assigned a unique username which is required for log in both to Account Management and the trading platform of choice. Procedures for adding a (non-employee) individual user are outlined below (search KB1004 for procedures for adding a second user for an individual account holder).
Background:
Procedures for adding a non-employee user are as follows:
- Log into Account Management.
- Select the Account Administration and then User Access Rights menu options.
- Click on the Add User button.
- You will be presented with the Add New User and Access Rights page where you will need to specify the first and last name of the individual who you wish to provide access, the first five characters of the user name, a password, that individual’s email address, and relationship to the Account Holder.
- Specify those functions which you which to provide access. These will be restricted to Report Management (activity statements, confirms, margin and tax reports), Trading Access (product/exchange configuration, paper trading account) and User Management (updating password, email address or personal information). User will not have access to the Funds Management or Account Administration functions and will therefore have no ability to perform tasks such as transferring assets, updating the information of the account holder, adding additional users or closing the account.
- Click on the Continue button.
- Verify details and click on the Submit button.
- Provide electronic signature to the Limited Power of Attorney agreement and click on the Continue button.
- If Trading Access has been provided, select the Home and Pending Items menu options and accept the Trader Authorization Form by clicking on the Continue button.
- The account holder will then need to contact the individual added as a user and provide them with the user user name and password combination they have selected.
- The new user will need to log into Account Management and confirm their email address by entering the token confirmation number sent to the address as provided. At that point another token confirmation number will sent to their email for the purpose of creating a new password and the user will then be prompted to fill out personal information on the New User Confirmation page and sign the Limited Power of Attorney agreement.
- Please note user add requests are subject to processing which, after the above steps have been completed, may take up to 2 business days prior to access being provided.
IMPORTANT NOTES:
1. In accordance with market data vendor requirements, the account will be assessed a separate market data subscription fee for each user account added. In addition, user account market data subscriptions are tied to and cannot vary from that of the account holder.
2. Account holders may delete a user account by clicking on the delete link next to the user name located within the Account Administration and then User Access Rights menu options.
Links:
Transfer on Death
Transfer on Death is a form of account registration which allows individuals to pass the assets in their IB account directly to another person or entity upon their death without having to go through probate. This registration option is solely available to individual accounts held by US residents (no joint or IRA accounts).
To elect this option, eligible account holders will need to do the following:
1. Log into Account Management and select the Account Administration and then Transfer on Death menu options.
2. You will need to specify your Primary Beneficiaries (from 1 to 6 whose percentage of ownership must total 100%)
3. You may elect to specify your Contingent Beneficiaries (from 1 to 6 whose percentage of ownership must total 100%). If you do not elect any Contingent Beneficiaries you will need to specify how you wish the interests of any Primary Beneficiaries that predecease you shall be treated (either pass back to the account holder's estate or pass to the remaining Primary Beneficiaries).
4) In the event any Primary or Contingent Beneficiary is a minor you will be required to designate an authorizer signer.
5) You will then be provided with a link to a pre-populated Transfer on Death Agreement which requires formal signature and notarization. Instructions are also provided for submitting the form to IB's New Accounts department. If the account holder is married and living in a community property state, spousal consent is required if the spouse is not named as the primary beneficiary (it is the responsibility of the account holder to make this determination).
6) Once the agreement has been returned and reviewed for approval, the registration will be complete and the account title amended (e.g. Jane Doe, TOD). Statements will also refelect this new account title.
7) Account holders may remove the TOD request prior to approval or revoke once approved (both via online option). A new agreement will need to be completed, signed and returned prior to the revocation becoming effective. In order for a revocation request to be effective, it must be received and approved by IB prior to the account holder's death.
8) In the event of the death of the account holder, the beneficiary will need to complete and remit the notarized Transfer on Death - Beneficiary Distribution Form to IB along with a certified copy of the death certificate. If the beneficiary does not already have an account with IB they will need to open one in order to transfer the percent of assets as indicated in the Transfer on Death Agreement.
Understanding Joint Account Types
Overview:
When a brokerage or bank account is owned together (jointly) by two individuals, each will be allowed some form of control over the account. These account types must be designated as either Joint Tenants with Rights of Survivorship (JTWROS), or Joint Tenants in Common (TIC), (see description below). With both types of joint accounts, any and all tenants may transact business in the account. In addition, withdrawals from the account are made payable to all names in which the account has been registered, and if a check is issued, it must be endorsed by all tenants.
Joint Tenants with Rights of Survivorship (JTWROS)
This is an account type where there is not a specific fractional financial interest in the assets held. Each account owner has an equal right to the assets held in the account. In the event of death or declaration of incompetency of any account owners, account ownership passes to the survivor.
Joint Tenants in Common (TIC)
Account type where each owner has a percentage ownership of assets in the account. A specific ownership is assigned to each individual. In the event of death or declaration of incompetency of any account owners, the deceased owner's percentage is retained by that owner’s estate, and is not passed to the surviving tenant.
Can advisors and other family accounts use WebTrader or MobileTrader?
Overview:
Beginning approximately March 5, 2009, financial advisors and proprietary trading group accounts (otherwise known as STL - Separate Trading Limit) have the ability to access both the WebTrader and MobileTrader platforms.
Note:
Only single account allocations are supported at this time. Orders cannot be entered using allocation groups or profiles.
Can advisors trade Mutual Funds?
Overview:
Mutual Funds
Beginning with TWS build 892, advisors have the ability to trade mutual funds by using a single account allocation.
How can my employer get set up in order to receive duplicate copies of my trade confirmations and statements?
In order for an employer to be set up so as to received this information, you will need to have them prepare and email to newaccounts@interactivebrokers.com a Rule 407 letter which confirms your employment and which serves as their request to receive duplicate statements and trade confirms. Assuming that your employer is a financial institution which, for in-house compliance purposes and/or as a result of regulatory mandate monitors the trading activities of their employees, they should be familiar with the preparation and contents of this letter.
You may also want to first verify with your employer whether they are a participant in the IBEmployeeTrackSM program which automatically identifies new IB accounts opened by employees and organizes into a single daily transmission the reports required for all.
Note that once established, this reporting cannot be terminated without confirmation from the employer that the delivery of statements and confirms is no longer required.
NOTE:
If this request is being driven by a change in the account holder's employment, the account holder should update their employment information within Account Management. In addition, if the account holder selects the Applicant Information and then Regulatory Information menu options within Account Management they will be presented with the following question:
Is the account holder or any immediate family member who resides in the same household, registered as a broker-dealer or an employee, director or owner of a securities or commodities brokerage firm?
Answering 'Yes' to that question will prompt a series of questions and generate a sample Rule 407 letter.
What is a Roth IRA?
A Roth IRA is an Individual Account allowed under the tax law of the United States. It's unique tax structure is the main advantage over a the standard Traditional IRA. Some of the advantages are listed below:
- Direct contibutions must be from earned income which has been reported on form Schedule C (Business income), form Schedule F (Farm income), or on U.S. form W-2. (Earned income typically does not include Social Security benefits, pensions, interest, dividends, rental income, or captial gains, but it can include alimony).
- Contributions may be made to a Roth IRA even if the owner participates in a qualified retirement plan such as a 401(K).
- Direct contibutions (not including rollovers) may be withdrawn tax and penalty free at any time since the funds have already been taxed.
- Rollovers (converted before age 59 1/2) may be withdrawn tax and penalty free after the seasoning period which is currently 5 years (after waiting at least 5 tax years, the original converted amount may be withdrawn tax and penalty free).
- Earnings may be withdrawn tax and penalty free after the seasoning period and age 59 1/2. (Up to $10,000 USD in earnings withdrawns are considered fax-free if the money is used to purchase a principle residence).
- Roth IRA does not require manditory distribution based on age. Owners who do not need the money may leave it to their Heirs. However, beneficiaries who inherited Roth IRAs are subject to the minimum distribution rules.
How do I upgrade my cash account to a margin account?
Overview:
Requests to have an account upgraded from a 'Cash' type to 'Margin' type can be initiated by logging into Account Management and selecting the Trading Access and then Trading Configuration menu options. IB offers two margin types: the standard Reg T Margin and Portfolio Margin. Note that as Portfolio Margining generally provides for greater leverage, accounts must maintain a minimum net liquidating equity balance of at least USD 100,000 to qualify for this margin treatment.
Also note that requests for margin upgrades are subject to a compliance review to ensure that the account holder maintains the appropriate qualifications. This review typically takes between 1 -3 business days to complete.
