portfoio margin for an IRA account with IB

bumblebuzzard · Feb 1, 2011

The main reason you can't get an IRA margin account with IB or anyone else is that the IRS says so.

According to IRS regulations, if any part of an IRA is used as collateral, then the IRA is considered to be distributed. In a margin account, the entire account is collateral.

Objections should be sent to Internal Revenue Service. Expect prompt change of regulations to meet your requirements.

Kalparker · Feb 2, 2011

i think you could get around margin restrictions by opening a self directed ira, so it would be more of a trust structure, and you then could get around margin restrictions and even be able to buy real estate. It's just that you will need a good amount of money.

hippie · Feb 3, 2011

Quote from Surdo:

An IRA can not be PortfolioMargined, think about it, if a trade goes severely against you, how would you pay back the "loan" since IRA contributions have a max per year???

I can trade futures in my IB IRA but cannot short a stock even if I get call protection. This doesn't quite make sense to me. Can anyone explain?

stevegee58 · Feb 3, 2011

Quote from hippie:

I can trade futures in my IB IRA but cannot short a stock even if I get call protection. This doesn't quite make sense to me. Can anyone explain?

Don't try to look for sense in all this.

jnbadger · Feb 3, 2011

Quote from stevegee58:

Don't try to look for sense in all this.

Ditto. The people who write these regs are the same people who think a covered call is perfectly safe, and a naked put is extremely risky.

atticus · Feb 3, 2011

Someone please show me a margined IRA account, let alone a PM IRA account. What a waste of bandwidth.

stevegee58 · Feb 3, 2011

Quote from atticus:

Someone please show me a margined IRA account, let alone a PM IRA account. What a waste of bandwidth.

Weeeeeeeeel, IB does have a margin IRA:

http://individuals.interactivebrokers.com/en/p.php?f=accountConfig&p=i&ib_entity=llc

It's margin in the sense that you can daytrade, have option spreads, etc. but there are restrictions to keep it legal for the IRS.

Now is Now · Feb 3, 2011

Quote from hippie:

I can trade futures in my IB IRA but cannot short a stock even if I get call protection. This doesn't quite make sense to me. Can anyone explain?

Simply hit the brokers' lower threshhold and you will get your answer very quickly...

The broker will cover your position at net balance $2000 or less....

The trader does not lose everything, but the broker is protected.

End of story...as for the OP...name says it all

NiN

MR.NBBO · Feb 3, 2011

Quote from stevegee58:

Weeeeeeeeel, IB does have a margin IRA:

http://individuals.interactivebrokers.com/en/p.php?f=accountConfig&p=i&ib_entity=llc

It's margin in the sense that you can daytrade, have option spreads, etc. but there are restrictions to keep it legal for the IRS.

It's not a true margin account, this is just a way within the IRS regs to get around T+3 issues.

comintel · Feb 8, 2011

Quote from hippie:

I can trade futures in my IB IRA but cannot short a stock even if I get call protection. This doesn't quite make sense to me. Can anyone explain?

There is technically (and in fact) no margin loan with futures so you do not run afoul of IRS regulations about borrowing against assets.