Are broker "Limited Margin IRA Accounts" Legal?

[vanman72001]

Ahh...today TD Amer fixed it. I no longer have the 50% margin buying power. It's back to cash on hand only buying power. That makes sense. I knew it was too good to be true!

At least now maybe I can avoid T+2 good faith violations.

 

[SwissCaesar]

vanman72001, I'm sorry but I'm a little confused and hope you can help me out. Are you saying that TDA allows "limited margin" in an IRA and that is how you can avoid T+2 good faith violations? Your "cash on hand" remark in the same post threw me off.

Specifically, if I owned Stock A for some time, then sold it one day to buy Stock B, does TDA provide limited margin to allow me to sell Stock B the following day, without creating a good faith violation?

 

[markd01]

Specifically, if I owned Stock A for some time, then sold it one day to buy Stock B, does TDA provide limited margin to allow me to sell Stock B the following day, without creating a good faith violation?

Yes, this is the case in my ATMD Roth and Rollover IRA accounts, buying power is restored right after exiting a position.

On the other hand, my AMTD ESA (Education Savings Account, for my kids college) does not have the limited margin option, invoking T+2 good faith violations. Are there any US brokers with "limited margin" for an ESA account?

 

[vanman72001]

vanman72001, I'm sorry but I'm a little confused and hope you can help me out. Are you saying that TDA allows "limited margin" in an IRA and that is how you can avoid T+2 good faith violations? Your "cash on hand" remark in the same post threw me off.

Specifically, if I owned Stock A for some time, then sold it one day to buy Stock B, does TDA provide limited margin to allow me to sell Stock B the following day, without creating a good faith violation?

Yes, it's limited margin that allow you to exit a position and immediately enter a new position with the freed up funds without waiting for the funds to settle. So...if you want to day trade multiple times per day using the same funds in your Roth IRA, you can. You can keep churning the dollars again and again. I like to keep the my long-term, core positions in an etf like SPY or QQQM, and then leave about 5% or 10% of the Roth IRA in cash to day trade or scalp with. It works out great.