IRA: Understanding Rollovers
Interactive Brokers offers three IRA account types for US 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 US retirement accounts. Select from the list below for a brief description of each rollover type available, as well as the their guidelines.
IRA to Employer Sponsored Retirement Plan Rollover
Rollover Types
Funds withdrawn from an IRA and re-deposited into an IRA within 60 days may be eligible for treatment as a 60-day rollover contribution.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 - IBKR 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 IRA Tax Reporting for details.
Funds received or withdrawn from an employer-sponsored retirement plan and deposited directly into an IRA.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 - IBKR 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 IRA 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.
Limitations & Guidelines
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 The rule applies to funds withdrawn from each separate IRA.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.)
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.)
Click here to return to the Retirement Account Resource page.
Disclaimer: IBKR 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 US Internal Revenue Service.
Glossary terms:
How do I transfer my US securities positions from my current broker to IB?
Overview:
Broker to broker transfers for US securities are conducted via a process known as the Automated Customer Account Transfer Service or ACATS. This process generally takes between 4 to 8 business days to complete in order to accommodate the verification of the transferring account and positions. The request is always initiated via the receiving broker (IB in this case) and can be prompted by following the steps below.
1. Log into Account Management and select the Transfer & Pay and then Transfer Positions menu options.
2. From the Transaction Type drop-down list select 'Inbound Position'
3. From the Method drop-down list select 'ACATS'.
4. Enter the sending Broker Information in the fields provided, and click CONTINUE
5. In the Transaction Information section, indicate whether or not you wish to transfer all assets and select Yes to the authorization option.
a. Note that a "transfer all assets" election does not require that you specify any assets as an attempt will be made to transfer your account in its entirety. Account holders should note, however, that certain positions may not be on the list of securities eligible to trade at IB and others, while transferable, may be subject to a house margin requirement higher than that of the delivering broker. In the event IB receives an asset list from the delivering broker which includes ineligible positions or the aggregate of the positions transferred are such that a margin deficit would exist were the transfer to occur, IB will attempt to contact you to remedy the situation within the allocated time frame after which an automatic reject of the full transfer would take effect. Account holders may wish to minimize potential delays or problems associated with a ‘Full’ transfer request by verifying security eligibility and margin requirements via the Contract Search link located at the upper right hand corner of the IB homepage prior to initiating the transfer.
b. If you elect to not "transfer all assets", the system will require that you specify the positions you wish to transfer. Click Add Asset to add the positions you wish to transfer. Fill out the Asset Search and Transaction Information sections and click Continue.
6. On the page that appears, type your signature in the Signature field, and then click CONTINUE.
Click BACK to modify the transfer request.
Please note that brokers generally freeze the account during the transfer period to ensure an accurate snapshot of assets to transfer and may restrict the transfer of option positions during the week prior to expiration. You may wish to check with the delivering broker to verify their policy in this regard. In addition, please note if your IB account is currently maintaining positions on margin, any cash withdrawals or adverse market moves could increase the likelihood that your account falls out of margin compliance during the transfer period which may delay or prevent completion of the transfer.
IMPORTANT NOTICE
Applicants may meet the initial account funding requirement through the transfer of securities positions and/or cash via the ACATS system.
Links:
The average price shown for one of my positions in the Trader Workstation is incorrect.
Overview:
Average trade prices may be susceptible to reporting error on the Trader Workstation, particularly in situations where a corporate action or position transfer takes place. While this information is intended for advisory purposes only and such errors have no impact upon the account equity or any ultimate tax obligation of the account holder, this information is adjustable by the account holder. To adjust the average cost of a particular security, open the Account Window within the Trader Workstation and scroll down to the Portfolio section. Select the asset in question from the Portfolio section and right click on it to display the drop-down window and the Adjust Average Price menu option. Enter the desired average price into the dialog box and click OK to update the Trader Workstation view.
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