When transferring an account from another U.S. broker, whether in whole or part, via ACATS to IBKR clients must provide certain information to confirm the existence of the account and initiate the transfer process.  This information is provided via the in Account Management (Transfer & Pay and then Transfer Positions menu options) and includes the client's account type and title as reflected on the delivering broker's records. IBKR, in turn, submits this information to that broker and it must match in its entirety for the transfer process to continue.

One of the more common causes of transfer rejection by the delivering broker is a mismatch in the account number provided by the client when compare to that on the broker's records.  IBKR recommends that clients review a copy of their brokerage statement to confirm their account number and has provided below statement samples from certain of the more common brokers highlighting where this information can be found.

• Charles Schwab
• Fidelity Investments
• Merrill Edge
• TD Ameritrade
• Vanguard

Charles Schwab - Broker #0164.  Account Number convention is 8 characters, all numeric.

Fidelity Investments - Delivers through National Financial Services, Broker #0226.  Account Number convention is 9 characters, first 3 alpha-numeric and last 6 numeric.

Merrill Edge - Broker #0671.  Account Number convention is 8 characters, combination of alpha and numeric.

TD Ameritrade - Broker #0188. Account Number convention is 9 characters, all numeric.

Vanguard- Broker #0062. Account Number convention is 8 characters, all numeric.

Note: This article contains images of sample broker statements which are for illustrative purposes only and which may contain logos that remain the property of each of those brokers.

Introduction
To comply with regulations regarding the sale of unregistered securities and to minimize the manual processing associated with trading shares that are not publicly quoted, IBKR imposes certain restrictions on U.S. Microcap Stocks. A list of those restrictions, along with other FAQs relating to this topic are provided below. 

Microcap Restrictions

• IBKR will only accept transfers of U.S. Microcap stocks from Eligible Clients. Eligible Clients include accounts that: (1) maintain equity (pre or post-transfer) of at least $5 million or, clients of financial advisors with aggregate assets under management of at least $20 million; and (2) have less than half of their equity in U.S. Microcap stocks.
• IBKR will only accept transfers¹ of blocks of U.S. Microcap stocks where the Eligible Client can confirm the shares were purchased on the open market or registered with the SEC;
• IBKR will not accept transfers¹ of or opening orders for U.S. Microcap Stocks designated by OTC as Caveat Emptor or Grey Market from any client. Clients with existing positions in these stocks may close the positions;
• Execution-only clients (i.e., execute trades through IBKR, but clear those trades elsewhere) may not trade U.S. Microcap Stocks within their IBKR account. (IBKR may make exceptions for U.S.-registered brokers);

Microcap FAQs

What is a U.S. Microcap Stock?
The term “Microcap Stock” refers to shares (1) traded over the counter or (2) that are listed on Nasdaq and NYSE American that have a market capitalization of between $50 million to $300 million and are trading at or below $5. For purposes of this policy, the term Microcap Stock will include the shares of U.S. public companies which have a market capitalization at or below $50 million, which are sometimes referred to as nanocap stocks or trade on a market generally associated with Microcap Stocks.

As Microcap Stocks are often low-priced, they are commonly referred to as penny stocks. IBKR may make exceptions, including for stocks traded at low prices that recently had a greater market cap. In addition, IBKR will not consider ADRs on non-US companies to be Micro-Cap stocks.

Where do Microcap Stocks trade?
Microcap Stocks typically trade in the OTC market, rather than on a national securities exchange. They are often electronically quoted by market makers on OTC systems such as the OTC Bulletin Board (OTCBB) and the markets administered by the OTC Markets Group (e.g., OTCQX, OTCQB & Pink). Also included in this category are stocks which may not be publicly quoted and which are designated as Caveat Emptor, Other OTC or Grey Market.
In addition, U.S. regulators also consider stocks listed on Nasdaq or NYSE American trading at or below $5 with a market capitalization at or less than $300 million to be Microcap Stocks.

What happens if IBKR receives a transfer from an Eligible Client where one or more of the positions transferred is a Microcap Stock?
If IBKR receives a transfer containing a block of a Microcap stock, IBKR reserves the right to restrict the sale of any Microcap position(s) included in the transfer unless the Eligible Client provides appropriate documentation establishing that the shares were either purchased on the open market (i.e., on a public exchange through another broker) or were registered with the SEC pursuant to an S-1 or similar registration statement.

Eligible Clients can prove that shares were purchased on the open market by providing a brokerage statement or trade confirm from a reputable broker reflecting the purchase of the shares on a public exchange. Eligible Clients can establish that the shares are registered by providing the SEC (Edgar system) File number under which their shares were registered by the company (and any documents necessary to confirm the shares are the ones listed in the registration statement).

NOTE: All customers are free to transfer out any shares we have restricted at any time.
 

What restrictions will IBKR apply to Prime accounts?
Clients whose activities include Prime services are considered Eligible Clients solely for the purposes of those trades which IBKR has agreed to accept from its executing brokers. However, while Prime accounts may clear U.S. Microcap Stocks at IBKR, those shares will be restricted until such time IBKR confirms that the shares are eligible for re-sale under the procedures discussed above.  To remove the restriction for shares purchased on the open market, please provide an official Account Statement or Trade Confirmation from the executing broker or have the executing broker provide a signed letter, on company letterhead, showing the IBKR account name and number, stating that the shares were purchased in the open market, along with the details of the executions (date, time, quantity, symbol, price, and exchange).  Or if the shares were acquired through an offering the letter must provide documents or links to the relevant registration statement and state that the shares were part of it.

To summarize: Sell Long trades will be accepted if the long position is no longer restricted.  Sell Short trades will be accepted.  Buy Long trades will be accepted and the position will be restricted until Compliance is provided with sufficient information to remove the restriction.  Buy Cover trades and intraday round trip trades will not be accepted.

What happens if a stock you purchase gets reclassified as Grey Market or Caveat Emptor?
If you purchase a stock in your IBKR account that at a later date becomes classified as a Caveat Emptor or Grey Market stock, you will be allowed to maintain, close or transfer the position but will not be able to increase your position.

Where can I find a list of stocks that IBKR has designated as U.S. Microcaps?

A list of stocks designated as U.S. Microcaps by IBKR is available via the following link: www.ibkr.com/download/us_microcaps.csv

Note that this list is updated daily.

Where can I find additional information on Microcap Stocks?
Additional information on Microcap Stocks, including risks associated with such stocks may be found on the SEC website: https://www.sec.gov/reportspubs/investor-publications/investorpubsmicrocapstockhtm.html

For information regarding Canadian stock transfer restrictions, see KB3118
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¹This includes transfers by any method (e.g., ACATS, DWAC, FOP), conversion of Canadian listings to their U.S. equivalent via “Southbound” transfer, transfers to cover existing short positions, IB Prime customers executing with other brokers and clearing to IBKR, etc.

Overview
The Direct Registration System (DRS) allows shareholders to register their U.S. share holdings on the books and records of the issuer in an electronic rather than paper certificate form through the issuer’s designated transfer agent. Once held in a DRS account, the shares may then be transferred electronically via the Depository Trust Company (DTC) to your IB account where transactions may take place or where the shares may be afforded margin loan value.

It should be noted that not all shares are DRS eligible. In general, most U.S. exchange traded securities are, but many OTC shares, as well as shares subject to a restriction and therefore held in certificate form, are not.

Transfer Process
To deposit shares held in your DRS account to your IB account you will need to log into Account Management and create transfer instructions. These instructions require that you provide IB with certain information regarding your DRS account (e.g., account number and taxpayer ID) which you will need to obtain from and/or confirm with your transfer agent. It’s important that you provide IB with information which matches that of your DRS account, otherwise your transfer agent will reject the request and you will be charged a rejection fee. Information regarding fees for rejected as well as settled transactions are posted on the website.

Once the DRS account information has been confirmed, log into Account Management and proceed as follows:

1. Select the Funding and then Position Transfers menu options;

2. From the Position Transfer screen, select a transfer method of DRS-Direct Registration System and transfer type of Deposit via the drop-down menus;

3. You’ll be directed to the DRS Transfer screen where the taxpayer ID you’ve provided to IB is displayed. If this does not match that which you maintain for your DRS account, you will first need to reconcile and correct the information so it matches prior to proceeding with the transfer request. Requests submitted with a mismatched taxpayer ID will result in the transfer being rejected by your transfer agent and your account being subject to a rejection processing fee;

4. Enter your DRS account number and click the Continue button. Note that requests submitted with an account number that doesn't match that of your DRS account will result in the transfer being rejected by your transfer agent and your account being subject to a rejection processing fee;

5. Enter the symbol of the security you intend to transfer as well as the share quantity. Note that requests submitted with a symbol not held within or a share quantity which exceeds that held in your DRS account will result in the transfer being rejected by your transfer agent and your account being subject to a rejection processing fee;

6. Enter your electronic signature and click the “Continue” button to confirm your transfer request.

IB will then notify DTC who will match the security to its associated transfer agent and send them notification of your request. Assuming the DRS account and share information you’ve provided is correct, the transfer agent will post the shares for delivery to IB.  Note that while transfer requests typically settle within 2 -5 business days, the transfer agent may take longer to respond to the notification and, if no response is received within 30 days, the request will be canceled.

IMPORTANT NOTE
If you are transferring shares from a joint account or are a non-US person, special consideration needs to be provided to the taxpayer ID you provide to IB for matching to your DRS account. In the case of a joint account, the ID will generally be one of the SSNs of the joint account holders or a default value of 999999999. In the case of a non-US person, where no US taxpayer ID exists, a default value of 111111111 is often used. In either case, you will need to verify with the transfer agent the identifier they will recognize for matching purposes. If the transfer agent requests an identifier which doesn’t match one of the elections provided within Account Management, please contact Customer Service for transfer assistance.

This information is for general educational purposes only.  Individuals should consult with their financial adviser or legal counsel to determine how rollover regulations affect their unique situations.

Generally, an IRA rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan.  The contribution to the second retirement plan is called a rollover contribution.

This article outlines the types of IRA rollover transactions, rules and conditions, IB's Rollover Certification form, and rollover transaction details.  Select from list below for details:

Rules & Conditions

Rollover Certification

Eligible Rollover Transactions

Ineligible Transactions

Rules & Conditions

Prior to completing an IRA Rollover transaction, we recommend that you review the rules and conditions surrounding eligibility.  Interactive Brokers can accept as a tax-free transaction an eligible rollover distribution as defined under the Internal Revenue Code.  Included in this article is information about eligible transactions, as well as the Interactive Brokers  IRA Rollover Certification form.

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IRA Rollover Certification

Before accepting an IRA rollover transaction into an Interactive Brokers LLC IRA, we require that you review your eligibility for the rollover and certify your understanding of the rollover rules and conditions.  The IRA Rollover Form includes the IRA Rollover Certification. 

The Fund Transfers page within the Account Management lets you notify IB of an IRA Rollover deposit of funds into your account.  Select the Funding tab in the header link and choose Deposit Funds in the Transaction list.   In the Method list, select Direct Rollover.  Complete, sign, and return both forms to the Interactive Brokers address listed on the form.

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Rollover Transactions

Two types of IRA rollover transactions exist with different guidelines and delivery methods:

1. Direct Rollover - a transfer of assets from an employer-sponsored retirement plan directly to an eligible IRA.  If you choose to receive the distribution first, then you may roll over the funds to the IRA within 60 days.
2. Indirect Rollover - a distribution from an IRA paid to you, followed by a rollover into another IRA within 60 days.  The IRS allows an indirect rollover of each IRA's funds once during a twelve-month period.

(Note:  A distributions directly from one IRA trustee to another IRA trustee is a Trustee-to-Trustee transfer.  It is not affected by the twelve-month waiting period.)

For additional information about rollovers, visit Understanding Rollovers.  See also IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) for more specific guidelines on moving retirement plan assets.

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Eligible Rollover Transactions

Almost any distribution from a qualified plan can be rolled over to an IRA.  Your retirement account may be eligible for one of the following eligible rollover transactions.

Traditional IRA or SIMPLE IRA to Traditional IRA Rollover

• Funds or property deposited less than 60 days of receipt by the IRA owner from the previous IRA
• During the preceding 12 months, no other distributions from the distributing IRA were rolled over
• The assets involved in the transaction have not been rolled over in the past 12 months
• Required Minimum Distribution satisfied (if over 70 1/2)
• For SIMPLE IRAs, after two years from the first contribution

Roth IRA to Roth IRA Rollover

• Funds or property deposited less than 60 days of receipt by the IRA owner from the previous IRA
• During the preceding 12 months, no other distributions from the distributing IRA were rolled over
• The assets involved in the transaction have not been rolled over in the past 12 months

Rollover or Direct Rollover from Qualified Plan into a Traditional IRA

• Eligible participant (participant, spouse beneficiary, or former spouse due to divorce)
• Funds or property deposited less than 60 days of receipt by the participant from the previous plan
• Funds received from an eligible qualified retirement plan
• Required Minimum Distribution satisfied (if over 70 1/2)
• Consists of funds, property, or proceeds from the sale of property distributed from the qualified plan
• All of the funds are eligible to be rolled over

Roth IRA to Roth IRA Rollover

• Funds or property deposited less than 60 days of receipt by the IRA owner from the previous IRA
• Required Minimum Distribution satisfied (if over 70 1/2)

Ineligible Rollover Transactions

Some funds distributed from a retirement plan are not eligible for rollover into an IRA.  The following transactions are not eligible rollover transactions.

• Any portion of a distribution from a retirement plan not rolled over
• Required Minimum Distributions
• Distribution of excess contributions and related earnings
• Retirement plan loan treated as a distribution
• Hardship distributions
• Distributions part of substantially equal payments (72-t)
• Dividends on employer securities
• Non-spousal death benefit distributions
• The cost of life insurance coverage

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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 qualified tax adviser or refer to the U.S. Internal Revenue Service.