IRA Account without waiting for T+3. IB has one. Is it legit?

Quote from GTS:

....I wonder if IB would let you square the account by making a cash transfer from a non-IRA account....
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Now, this is exactly what I'm concerned about.

If IB let's you do something, does that mean it's automatically legit by the IRS?

What you just mentioned totally violates IRS Regulations. totally.

Every other broker is saying this Margin IRA that IB is offering is totally against regulations. Could they ALL be wrong?
 
Quote from jackpearson:

Now, this is exactly what I'm concerned about.

If IB let's you do something, does that mean it's automatically legit by the IRS?

What you just mentioned totally violates IRS Regulations. totally.

Every other broker is saying this Margin IRA that IB is offering is totally against regulations. Could they ALL be wrong?
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Well let's be realistic about this...IB (their competitor) is offering a product that they can't or won't...does it surprise you that they would try to convince you that something is not legit about it?

I'd give more weight if the claim that the IB IRA is not legit came from a neutral source...not a competitor of IB.

I guess you can always ask the IRS for a ruling...good luck with that.
 
If you think it is illegal and you know more than the IB lawyers/compliance department, then don't use them and take your IRA and expertise to another broker. It's that simple.
 
Quote from The Bishop:

If you think it is illegal and you know more than the IB lawyers/compliance department, then don't use them and take your IRA and expertise to another broker. It's that simple.
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Let's not be so dismissive of the OP question - its not IB who has their ass on the line, if the IB IRA is not a legitimate IRA then its not IB that is in trouble, its all the folks that have established IB IRA's which the IRS rules as invalid causing a whole slew of tax issues for them (not IB).

If there is a problem with IB IRA's then I'd sure like to know sooner rather than later...that being said I would think that IRA's team of lawyers would have made sure it is kosher before they offered it.
 
I added the info about futures to demonstrate that what people think is obvious may not be. IB's futures performance bond is typically 1/2 the initial overnight rate. A large number versus the typical intraday move. Also recall the constant complaining in 2008 when IB increased the day-trading performance bond to equal the overnight requirement. Going negative in an IB account is highly unlikely.

Many IRA's trade option spreads. Theoretically the spreads limit the risk to the spread between the short and long legs. However, if the short leg is exercised early the account may not have enough cash to buy the underlying. Where does the money come from to pay for the underlying? Eventually the purchased underlying can be sold against the remaining long leg but the risk is unknown and could exceed the account value.

However, the OP's original question had to do with using the proceeds of a stock sale on the same day, no T+3 delay. Safe and legal.

Jack
 
Quote from GTS:

Let's not be so dismissive of the OP question - its not IB who has their ass on the line, if the IB IRA is not a legitimate IRA then its not IB that is in trouble, its all the folks that have established IB IRA's which the IRS rules as invalid causing a whole slew of tax issues for them (not IB).

If there is a problem with IB IRA's then I'd sure like to know sooner rather than later...that being said I would think that IRA's team of lawyers would have made sure it is kosher before they offered it.
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Don't you think IB's compliance and legal departments have already gone thru the motions to determine the legality of their IRA offerings? IB has some of the most restrictive compliance requirements among many of the retail brokers out there today. To assume they would be lax in this area just to entice those who would not be active traders would be a mistake. But like all other issues when dealing with brokers, if something makes you uncomfortable, you don't have to use them and OP is free to take his business to another that makes him more comfortable.

Or he could come here and ask for opinions rather than go right to the source and get the facts. :confused:
 
Quote from The Bishop:

But like all other issues when dealing with brokers, if something makes you uncomfortable, you don't have to use them and OP is free to take his business to another that makes him more comfortable.

Or he could come here and ask for opinions rather than go right to the source and get the facts. :confused:
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Having an IRA you can trade in is a tremendous plus. I'm definitely interested in doing it.

But, I'm also not interested in having an IRS letter sent to me saying the account I had my retirement money in does not follow the rules for an IRA & I now owe taxes on the whole amount along with penalties on all the past trades.

I came here to ask opinions because of the harsh answer I received from other brokers. They didn't just say they didn't offer it, they said it was against regulations for an IRA account.

Don't believe me? Call Schwab & Ameritrade to start & listen to what they tell you. They're not exactly bucket shop brokers.

If it IS legit, who wouldn't want a margin IRA account? I sure would.

Therefore, I'm here getting opinions from others on their thoughts. That's the purpose of this message board.
 
Quote from The Bishop:

Don't you think IB's compliance and legal departments have already gone thru the motions to determine the legality of their IRA offerings?
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Its not clear to me that if I do futures trading in my IRA and the IRS deems that makes my IRA a non-IRA if IB has done anything wrong or if all of the problem falls on my shoulders.

Are you of the opinion that IB would pay for all the back taxes and penalties I am assessed if the IRS ever determined that they IRA activity that they allowed in my account caused my IRA to become re-characterized as a non-IRA account? I am not.

Its not unusual for large financial firms to offer products which the IRS later deems to be invalid (e.g. tax shelters)...I'm sure those firms have compliance and legal depts are as well...its all a question of interpretation of the IRS rules.

Or he could come here and ask for opinions rather than go right to the source and get the facts. :confused:
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The only "source" that matters is the IRS, not IB...and like I said before, good luck getting the IRS to give you a ruling in writing regarding this.
 
I believe it is the Trustee that is responsible for determining the types of investments that are allowed in an IRA account.

The trustee is the legal holder of the account.

You are "just" the beneficiary of the account, and also the person making trades on behalf of the trustee under rules set up with IB by the trustee.

If it was found that anything in the way of improper practices was taking place, I believe that you would have recourse against the trustee for any IRS penalties. After all, you rely on the expertise of the Trustee to qualify the IRA trust.

In the case of IB, the trustee is Principal Trust Company.

I am sure that both IB and Principal Trust have exhaustive legal opinions stating that the rules they have established are fully compliant with the law.

If you have questions, you could contact Principal Trust. They are your trustee. IB is legally speaking just executing trades for the IRA trust.
 
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