When opening your account you have a choice of Reg T Margin, Reg T IRA, Cash, or Portfolio
Margin account types. For more specific information on margin calculations,
see our Margin Requirements page. The
following
table
provides a quick-glance comparison of
these accounts. View the account type page from the links above for more details.
| |
Reg T Margin |
Reg T Margin - IRA |
Cash |
Portfolio Margin1 |
| Stocks and Warrants |
- Margin is calculated on a real-time basis.
- Immediate position liquidation if minimum maintenance margin
requirement
is not met.
- Purchase and sale proceeds available immediately.
- US
securities regulations require a minimum USD 25,000 in equity or equivalent to day
trade.
|
- Cannot borrow cash i.e. have a debit balance or short stocks.
|
- Account must have enough cash to cover the cost of stock plus commissions.
- Shorting not allowed.
- Cash from the sale of stocks is available
three business days after the trade date.
- Account may trade in different currencies but must have the settled cash balance to enter trades.
- When authorizing market, relative and VWAP orders, a 5% cash cushion is required to compensate for market movements.
|
- Margin is calculated on a real-time basis.
- Immediate position liquidation will occur if the
minimum
maintenance margin requirement is not met.
- Purchase and sale proceeds available
immediately.
- US securities regulations require a minimum USD 100,0003 or equivalent for this account, or Reg T margin requirements will apply.
- Available only for US-traded products.
|
| Bonds |
- Margin is calculated on a real-time basis.
- Immediate position liquidation if minimum maintenance margin is not met.
- Shorting not allowed.
- Purchase and sale proceeds available immediately.
|
- Cannot borrow cash i.e. have a debit balance or short stocks.
|
- Account must have enough cash to cover the cost of bonds plus commissions.
- Shorting not allowed.
- Cash from the sale of bonds is available three business days after the trade date.
|
- Same as Reg T Margin Requirements.
|
| Stock and Cash Index Options |
- Margin is calculated on a real-time basis.
- Immediate position liquidation
if minimum maintenance margin requirement is not met.
- Purchase and sale proceeds available immediately.
- To purchase options the entire premium plus commissions must be deposited.
- To sell options
and other strategy-based combos, the margin
requirements and commissions must be covered.
- US Securities regulations require at least 25,000 USD in equity or equivalent to
day trade.
- Option market value may never be used for the purpose of borrowing funds.
|
- Cannot borrow cash i.e. have a debit balance or short stocks.
For information on combination strategies that require borrowing and consequently are not available, see the Reg T Margin IRA column on the Options Margin Requirements page.
|
- Full payment required for all call
and put purchases.
- Covered call writing is allowed, but the underlying
stock must be available and is then restricted.
- Naked put writing is
allowed, but the funds must be available and then are restricted.
- Cash from the sale of options is available one business
day after the trade date.
|
- Same as Portfolio Margin requirements for stocks.
|
| Futures2 |
- Margin is calculated on a real-time basis.
- Immediate position liquidation if minimum margin requirement is not met.
- Cash required to
meet variation margin requirements.
|
- Same as Reg T Margin requirements.
|
- Same as Reg T Margin requirements.
|
- Same as Reg T Margin requirements.
|
| Futures Options2 |
- Margin is calculated on a real-time basis.
- Immediate position liquidation if minimum margin requirement is not met.
- Cash required to meet variation margin requirements.
- Non-US futures options are available to US legal residents.
|
- Same as Reg T Margin requirements.
|
- Same as Reg T Margin requirements.
|
- Same as Reg T Margin requirements.
|
| Mutual Funds |
- Margin updated once per day at closing of funds.
- Position liquidation on end-of-day basis if minimum maintenance margin requirement is not met.
- Purchase and sale proceeds recognized end-of-day when order has been submitted and received.
- Shorting not allowed.
- Borrowing allowed 30 days after purchase of fund.
|
- Cannot borrow cash i.e. have a debit balance or short stocks.
|
- Account must have enough cash to cover the cost of funds plus commissions.
- Shorting not allowed.
- Cash from the sale of funds is available one business day after the trade date.
- Only available to US legal residents.
|
- Same as Portfolio Margin requirements for stocks.
|
| Single Stock Futures2 |
- Margin is calculated on a real-time basis.
- Immediate position liquidation if minimum margin requirement is not met.
- May be cross-margined with US stocks and options.
|
- Same as Reg T Margin Requirements.
|
- Same as Reg T Margin requirements.
|
- Same as Portfolio Margin requirements for stocks.
|
| Forex |
- Borrowing
in one currency to purchase another currency is allowed, but margin
haircuts will be applied on a real-time basis.
|
- Never allowed to borrow currencies.
|
- Cash from Forex transactions is available two business days after trade date.
|
- Same as Reg T Margin requirements.
|
Notes:
- (1)Portfolio Margin accounts are not available for IB Canada customers due
to IDA restrictions.
- (2)Please note that for commodities, including futures, futures options and single stock futures, "margin" refers to the amount of cash that must be put up BY THE CLIENT as collateral to support a transaction, in contrast to margin for securities which refers to the amount of cash a client borrows from IB.
- (3)Accounts with IBPrime services require a minimum of USD 500,000 or USD equivalent.
- Margin accounts have the ability to trade in all available countries.
- IRA accounts can have cash or margin trading permissions, but margin accounts are never allowed to borrow cash (have a debit balance) as per US IRS regulation.
- Cash accounts may be upgraded to Reg T Margin accounts but Reg T Margin accounts may not downgraded to cash accounts.
- In SIPP accounts, the initial and maintenance margin requirements for commodities are 150% of their normal margin requirements. Commodities include futures, futures options and single stock futures.
An IB Reg T Margin account allows borrowing to support:
- equities trading,
- shorting of equities,
- full options trading,
- full futures/futures options trading
- currency conversions
- securities/commodities trading in multiple currency denominations.
Margin requirements are computed on a formula-based real-time basis, with immediate position liquidation if the minimum maintenance margin requirement is not met. Purchase and sale proceeds are immediately recognized. US securities regulations require at least USD 25,000 (or USD equivalent) in equity to day trade.
Borrowing to support bond trading. Margin requirements are computed on a real-time basis, with immediate position liquidation if the minimum maintenance margin is not met. Purchase and sale proceeds are immediately recognized. Shorting of bonds is not allowed.
For buying options, you must deposit the entire premium plus commissions. For selling options and other strategy-based combinations, the margin requirements and commissions must be covered. Option market value may never be used for the purpose of borrowing funds. You must have stocks margin trading permissions in order to have options margin trading permissions.
Please note that for commodities, "margin" refers to the amount of cash that must be put up BY THE CLIENT as collateral to support a transaction, in contrast to margin for securities which refers to the amount of cash a client borrows from IB. For futures trading, special 50% of variation margin benefits are made available during the day on some futures exchanges.
Borrowing to support Mutual Funds may only be done 30 days after the purchase of the fund. Shorting Mutual Funds is never allowed. Net Asset Value is computed once per day at closing by the funds at which time your margin requirement and equity will be updated. Liquidation will occur on an end-of-day basis if minimums aren't met. Purchase and sales proceeds are recognized at the end of the day when the Mutual Fund order is submitted and confirmation received.
This also includes the purchase and sale of stocks, exchange traded funds and narrow based index futures contracts on margin. Margin is determined on a real-time basis with immediate position liquidation if the minimum margin requirement is not met. In the US, SSFs may be cross margined with stocks and options (IRA accounts can only cross margin SSFs, not stocks and options).
Borrowing in one currency to purchase another currency is allowed, but margin haircuts will be applied on a real-time basis. Margin accounts automatically get Forex trading permissions in order to effect trading of products denominated in multiple currencies.
To compare the characteristics of a Reg T margin account with those of Cash and Portfolio Margin accounts, see the Account Types comparison table.
US resident customers may open cash
or margin Individual Retirement Accounts (IRAs).
IRA margin accounts are afforded all the benefits of a margin account, such
as the ability to day
trade and the ability to trade
multiple currencies and multiple currency products, but are subject to the
following limitations:
- IRA accounts cannot borrow cash (i.e. have a debit
balance or short stocks).
- IRA accounts may be opened in any base currency, but when trading in a non-base currency product a currency trade must be executed first as you cannot borrow currencies.
- IRA accounts can only cross-margin single stock futures,
not stocks and options.
- IRA accounts cannot borrow currencies.
Customers are advised to consult a tax specialist for further details on IRA rules and regulations.
When you open an IRA account with Interactive Brokers, you must select a type of IRA account. The following IRA types are available:
- Traditional
- Traditional Rollover
- Traditional Inherited
- Roth
- Roth Inherited
- Simplified Employee Pension (SEP)
- Simplified Employee Pension (SEP) Inherited
Transfer methods describe the way an IB IRA account is funded. All of the following transfer methods are cash transactions, and Trustee-to-Trustee transfers can also use an ACATS position transfer in Account Management.
- Contribution - The dollar amount of assets you are contributing to an IRA account, subject to certain limits based upon your age and the year of the contribution. Contributions are reported to the Internal Revenue Service (IRS).
- Rollover - A transfer of funds from an IRA account with another trustee/custodian, within 60 days following a distribution, to an IB-IRA account. Rollovers are required to be reported to the IRS. IRA account types must be the same in order to rollover assets, for example if the originating account is a Roth IRA, your IB account must also be a Roth IRA.
- Direct Rollover - A transfer of funds from a qualified plan (pension, 401(k) or other qualified retirement plan) with an employer to an IB Traditional IRA account. In a Direct Rollover, the trustee/custodian of your employer qualified plan (401(k) or pension) transfers your retirement assets directly to IB. In general, no withholding tax or penalties apply to a Direct Rollover, however Direct Rollovers are reported to the IRS.
- Trustee-to-Trustee - A transfer of funds from an IRA account held with another trustee/custodian to an IB-IRA account, where the assets are transferred directly trustee/custodian to trustee/custodian, with no distribution of assets to you. ACATs position transfers are available, however the IRA account type and Tax ID must match in order to execute the transfer. Trustee-to-trustee transfers are not required to be reported to the IRS.
Refer to the Tax Reporting page on our website for information on IRS forms you will receive when transferring retirement plan assets.
The following table lists all available IRA types and applicable transfer methods.
| IRA Type |
Explanation |
Transfer Method |
| Traditional |
A retirement savings plan that allows an individual taxpayer to contribute earnings until they are withdrawn. Contributions are subject to annual limits depending on the age of the account owner and may or may not be deductible depending on the individual’s circumstances. Earnings accumulate tax deferred until distributed to you at which time the earnings are subject to tax upon withdrawal. A spouse may contribute to a separate account subject to the same limits. Withdrawals made prior to age 59½ are subject to a 10% penalty unless certain special circumstances apply. Distributions must begin by the account owner’s required beginning date (RBD), which is April 1 following the year you turn age 70½. Once you reach age 70½, you must withdraw at least a minimum amount – an annual Required Minimum Distribution (RMD) - by December 31 of each year. If an account owner fails to withdraw the full amount of the RMD annually, or fails to withdraw the RMD, there is a 50% tax penalty on the amount not withdrawn. |
Contribution
Rollover
Direct Rollover
Trustee-to-Trustee
IRA Conversion |
| Traditional Rollover |
A traditional IRA account that receives assets directly from an employer-sponsored plan such as a 401(k) or pension plan within 60 days of distribution from the plan. As long as no other assets are contributed to the Traditional Rollover IRA, the monies may be rolled over into a new employer's plan. A traditional rollover IRA is commonly used if you are changing jobs or retiring. |
Contribution
Rollover
Trustee-to-Trustee
IRA Conversion |
| Traditional Inherited |
An IRA account you may set up as the beneficiary of a Traditional IRA you inherited from a spouse or other IRA account owner who has died, to receive a transfer of beneficiary IRA assets. |
Trustee-to-Trustee |
| Roth |
A retirement savings plan that allows an individual taxpayer to contribute earnings, subject to certain income limits. Earnings accumulate tax-free and contributions are nondeductible. Unlike Traditional IRAs, a Roth IRA account owner may continue to contribute after age 70½ if they have earned income. Withdrawals prior to age 59½ are subject to a 10% penalty unless special circumstances apply. There are no age requirements when an account owner must begin taking distributions. Contributions are subject to annual limits depending on the age of the account owner. |
Contribution
Rollover
Trustee-to-Trustee
IRA Recharacterization |
| Roth Inherited |
An IRA account you may set up as the beneficiary of a Roth IRA you inherited from a spouse or other IRA account owner who has died, to receive a transfer of beneficiary IRA assets. |
Trustee-to-Trustee |
| Simplified Employee Pension (SEP) |
A tax-deferred retirement plan for small businesses and self-employed individuals where an employee can set aside a percentage of pre-tax income into the plan. Annual contributions an employer makes to an employee’s SEP-IRA cannot exceed the lesser of 25% of compensation, or $45,000 for 2009 and 2010. The same limits apply to contributions made to a self-employed individual’s SEP-IRA. There is 100% vesting of all plan contributions. Distributions generally follow the same rules that apply to IRAs. |
Contribution
Rollover
Trustee-to-Trustee
IRA Conversion |
| Simplified Employee Pension (SEP) Inherited |
An IRA account you may set up as the beneficiary of a SEP IRA you inherited from a spouse or other IRA account owner who has died, to receive a transfer of beneficiary IRA assets. |
Trustee-to-Trustee |
An IRA conversion is a transfer of Traditional, Traditional Rollover or SEP IRA assets to a Roth IRA with the same custodian or as a trustee-to-trustee transfer or rollover. A conversion is subject to Form 1099-R reporting for the distribution from the non-Roth and Form 5498 for the contribution to the Roth IRA.
Eligibility requirements
You are eligible to convert to a Roth IRA if your modified adjusted gross income (MAGI) does not exceed $100,000 (not including the IRA conversion amount) in the year you convert. This rule applies to both single and joint tax filers. Married individuals filing separate tax returns are not eligible to convert to a Roth IRA unless they have lived apart from their spouse for the entire tax year.
2010 changes
If you convert in 2010, neither the MAGI limit nor the requirement that married filing separately spouses live apart for the year will apply. Generally, when you convert to a Roth IRA, you are required to pay taxes on any taxable converted amount including deductible contributions and any investment earnings. If you convert in 2010, the income taxes may be spread over 2011 and 2012, with 50% of the taxes due being paid in each of those years.
Furthermore, if you convert your Traditional IRA to a Roth IRA, the taxable portion of your Traditional IRA will not be subject to a 10% penalty tax regardless of your age at the time of the conversion unless the full amount of the distribution is not converted (for example, if you elect to withhold taxes and the amount withheld is not replaced.)
The deadline to convert to a Roth IRA is December 31 of the year you choose to convert.
An IRA recharacterization is a transfer of converted Roth IRA assets back to a new or existing Traditional IRA account. Roth IRA converted amounts from a SEP IRA may also be recharacterized back to a SEP IRA account. IRS reporting is required for the distribution from the Roth IRA and the contribution to the non-Roth IRA.
Timing
Election to recharacterize must be made by the tax return due date, plus the maximum six-month extension period (whether or not the return is actually extended). The deadline to recharacterize a 2010 Roth conversion is October 15, 2010.
An IRA recharacterization is a transfer back to a new or existing Traditional IRA of converted Roth assets. Roth IRA converted amounts from a SEP IRA may also be recharacterized back to a SEP. IRS reporting is required for the distribution from the Roth and the contribution to the non-Roth IRA.
Timing
Election to recharacterize must be made by the tax return due date, plus the maximum six-month extension period (whether or not the return is actually extended).
The deadline to recharacterize a 2010 Roth conversion is October 15, 2010.
Reconversion is defined as a second conversion (following a Recharacterization) from a non-Roth IRA to a Roth IRA. Taxpayer has already made a first conversion from a non-Roth to a Roth IRA and then recharacterized the conversion amount (including net earnings) back to a non-Roth IRA. You may not convert, recharacterize and then reconvert in the same tax year. IRS reporting is required.
A taxpayer cannot reconvert back to a Roth IRA until the later of:
- January 1 of the tax year following the year of the first conversion, or
- 30 days after the recharacterization to a non-Roth IRA
If the taxpayer makes a reconversion within the same tax year or before the 30 day waiting period, the reconversion is disregarded and the taxpayer must use the value of the non-Roth IRA at the time of the first conversion to calculate the taxable income for the year.
- If you are age 70½ or older and you have not taken a Required Minimum Distribution (RMD) from your IRA, you must do so prior to converting to a Roth IRA.
- For IRA Conversions from an IB traditional IRA (or IRA rollover) account, you first must open an IB Roth IRA if you do not already have one.
- Your existing traditional IRA account will be closed upon completion of a full conversion transfer.
- Please note that transfers of securities positions from a Traditional IRA to a Roth IRA will only be accepted between accounts with matching names and taxpayer identification numbers.
- You cannot revoke or modify your election to Recharacterize after the election has been made.
- An election to Recharacterize must be made by the federal tax return due date, plus the maximum six-month extension period, for example, October 15, 2011.
Consult your tax advisor before you decide to convert to a Roth IRA.
|
Contribution
Year
|
Roth, Traditional, & Direct Rollover Contribution Limit
(Under Age 50)
|
Roth, Traditional, & Direct Rollover Contribution Limit
(Age 50 and over)
|
Simplified Employee Pension
(SEP- IRA)
|
| |
Filing Deadline 4/15 of following year
|
Filing Deadline 4/15 of following year
|
Filing Deadline 4/15 of following year or as extended
10/15
|
|
2008
|
5,000
|
6,000
|
Lesser of 25% eligible Comp. or $46,000 |
| 2009 |
5,000 |
6,000 |
Lesser of 25% eligible Comp. or $49,000 |
| 2010 |
5,000 |
6,000 |
Lesser of 25% eligible Comp. or $49,000 |
For IRA FAQs, click here.
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.
An IB Cash account requires the account holder to have enough cash in the account to cover the cost of the transaction plus commissions. No shorting is allowed. The account may trade in multiple currencies, but must have the settled cash balance to enter trades. Existing cash account holders can upgrade to a multi-currency cash account through Account Management.
You must have enough cash in the account to cover the cost of the stock plus commissions. Shorting of stock is not allowed. Cash from the sale of stocks becomes available 3 business days after the trade date. When authorizing market, relative and VWAP orders, a 5% cash cushion is required to compensate for market movements.
Margin requirements are computed on a real-time basis, with immediate position liquidation if the minimum maintenance margin is not met. Purchase and sale proceeds are immediately recognized. Shorting of bonds is not allowed.
Full payment must be made for all call and put purchases. Cash accounts allow for limited purchase and sale of options as follows:
- Covered call writing is allowed, but the underlying stock must be available and is then restricted.
- Naked put writing is also allowed, but the funds must be available and then are restricted.
You must have stock cash trading permissions in order to have options cash trading permissions. Cash from the sale of options becomes available 1 business day after the trade date.
Futures day trading benefits are not supported. (50% of regular margin requirements during the day, on certain exchanges). Margin is determined on a real-time basis with immediate position liquidation if the minimum margin requirement is not met. Only cash may be used to meet variation margin requirements. Non-US futures options are available to US legal resident customers. You must have futures trading permissions in order to have options on futures trading permissions.
You must have enough cash in the account to cover the cost of the fund plus commissions. Shorting of funds is not allowed. Cash from the sale of funds becomes available 1 business day after the trade date. Mutual Funds are only available to US legal residents.
This also includes the purchase and sale of stocks, exchange traded funds and narrow based index futures contracts on margin. Margin is determined on a real-time basis with immediate position liquidation if the minimum margin requirement is not met. In the US, SSFs may be cross margined with stocks and options (IRA accounts can only cross margin SSFs, not stocks and options).
Cash from Forex transactions becomes available 2 business days following the trade date.
To compare the characteristics of a Cash account with those of Reg T margin and Portfolio Margin accounts, see the Account Types comparison table.
Note: The securities segment of a cash account is always rule-based. These rules are:
- Long stock has no margin and no loan value.
- You cannot short stock.
An IB Portfolio Margin account allows borrowing to support:
- equities trading,
- shorting of equities,
- full options trading,
- full futures/futures options trading
- currency conversions
- securities/commodities trading in multiple currency denominations.
Margin requirements use a risk-based calculation methodology and are generally lower than margin requirements in a Reg T margin account.
Margin is based on the largest potential loss found by valuing the portfolio over a range of underlying prices and volatilities on a real-time basis. Immediate position liquidation will occur if the minimum maintenance margin requirement is not met. Purchase and sale proceeds are immediately recognized. US securities regulations require at least USD 100,000 (or USD equivalent) for this account. Accounts with IBPrime services require a minimum of USD 500,000 (or USD equivalent). If account equity falls below the Portfolio Margin requirements, Reg T margin requirements will apply.
Borrowing to support bond trading. Margin requirements are computed on a real-time basis, with immediate position liquidation if the minimum maintenance margin is not met. Purchase and sale proceeds are immediately recognized. Shorting of bonds is not allowed.
Margin is based on the largest potential loss found by valuing the portfolio over a range of underlying prices and volatilities on a real-time basis. Immediate position liquidation will occur if the minimum maintenance margin requirement is not met. Purchase and sale proceeds are immediately recognized. US securities regulations require at least USD 100,000 (or USD equivalent) for this account. Accounts with IBPrime services require a minimum of USD 500,000 (or USD equivalent). If account equity falls below the Portfolio Margin requirements, Reg T margin requirements will apply.
Margin is determined on a real-time basis with immediate position liquidation if the minimum margin requirement is not met. Only cash may be used to meet variation margin requirements. Special 50% of variation margin benefits are made available during the day on some futures exchanges. Non-US futures options are available to US legal resident customers. You must have futures trading permissions in order to have options on futures trading permissions.
Margin is based on the largest potential loss found by valuing the portfolio over a range of underlying prices and volatilities on a real-time basis. Immediate position liquidation will occur if the minimum maintenance margin requirement is not met. Purchase and sale proceeds are immediately recognized. US securities regulations require at least USD 100,000 (or USD equivalent) for this account. Accounts with IBPrime services require a minimum of USD 500,000 (or USD equivalent). If account equity falls below the Portfolio Margin requirements, Reg T margin requirements will apply.
Margin is based on the largest potential loss found by valuing the portfolio over a range of underlying prices and volatilities on a real-time basis. Immediate position liquidation will occur if the minimum maintenance margin requirement is not met. Purchase and sale proceeds are immediately recognized. US securities regulations require at least USD 100,000 (or USD equivalent) for this account. Accounts with IBPrime services require a minimum of USD 500,000 (or USD equivalent). If account equity falls below the Portfolio Margin requirements, Reg T margin requirements will apply.
Purchase and sale of stocks, exchange traded funds and narrow based index futures contracts on margin. Margin is determined on a real-time basis with immediate position liquidation if the minimum margin requirement is not met. In the US, SSFs may be cross margined with stocks and options (IRA accounts can only cross margin SSFs, not stocks and options).
Borrowing in one currency to purchase another currency is allowed, but margin haircuts will be applied on a real-time basis. Margin accounts automatically get Forex trading permissions in order to effect trading of products denominated in multiple currencies.
To compare the characteristics of a Portfolio margin account with those of Reg T Margin and Cash accounts, see the Account Types comparison table.
