STANDARD ACCOUNT TYPES
Through TD Ameritrade, we offer a wide variety of standard, retirement and specialty account types to help you grow your assets, minimize your tax exposure and achieve your life goals.
Individual
An individual account is a standard brokerage account with only one owner. The account owner can assign a beneficiary and upon death all assets in the brokerage account are passed to the beneficiary.
Joint Tenants with Rights of Survivorship (JTWROS)
A JTWROS account has two or more account owners, with each person having an undivided interest in the entire property. Upon the death of one account owner, remaining account holder(s) the rights to the entire account.
Tenants in Common
A Tenants in Common account has two or more account owners with each person owning a specified percentage of the entire property. Upon the death of one of the account owners, that person’s estate holds the right to their percentage of the account. Non-resident aliens are not eligible for this account type.
Community Property
A Community Property account is owned by two married people who acquire property during the marriage (with exceptions). Community Property is based on the theory that each spouse has equal interest in the property acquired by the efforts of either of them during the marriage. Upon divorce or death, the property is treated as belonging half to each spouse. Nine states allow Community Property accounts; ask your professional investment advisor for more information.
Tenants by the Entireties
A little-known option in many 401(k) plans is self-directed investing. A Tenants by the Entireties account is owned by two married people. This account type is different from Community Property in that upon the death of one account holder, the other retains the right to the whole account. However, property cannot be sold to satisfy the debts of one owner. Only certain states allow this account type, ask your professional investment advisor for more information.
Guardianship or Conservatorship
An account in which the account holder’s assets – usually a minor or a person who can no longer manage his or her own property or financial matters – are managed by a guardian or conservator in which investment decisions are made solely by the court-appointed guardian or conservator.
EDUCATION ACCOUNTS
Coverdell Education Savings Account
The Coverdell ESA is a savings plan created for the purpose of paying a student’s qualified educational expenses. These can include, but are limited to, tuition, books and uniforms. Like a 529, your money is tax-deferred, allowing your fund to grow faster. Contributions to Coverdell ESA are not tax-deductible. In additional, contributions are allowed for individuals under the age of 18. Distributions from a Coverdell ESA may be tax-free, but they must be used to pay for qualified educational expenses. The maximum contribution per year is $2,000.
Custodial Uniform Gifts to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) Accounts
With these type of custodial accounts, a minor can own cash or securities that are controlled by a custodian until he or she meets the age of majority in the state the account was set up. All deposits into these accounts are irrevocable gifts to the minor recipient. The Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act (UTMA) make it simple to transfer property to a minor without a formal trust and without the restrictions applicable to the guardianship of a minor’s property. Assets in the account become an irrevocable gift to the minor under the UGMA or UTMA. Custodial accounts are not tax deferred. Taxation of earnings will be dependent on the minor’s tax rate.
SPECIALTY ACCOUNTS
Trust
A Trust account allows the account owner to transfer assets to one or more recipients, called trustees, who hold legal title to the transferred assets and manage the assets for the benefit of the owner or other named beneficiaries.
Limited Partnership
A Limited Partnership (LP) account is established by two or more individuals who carry on a business for profit. At least one partner bears unlimited liability and additional partners are liable only to the extent of their investment. TD Ameritrade offers accounts for legally established limited partnerships. Partnership – A Partnership account is established by an association of two or more persons who have an established partnership agreement to carry on, as co-owners, a business for profit. The accounts are not subject to taxation. Instead, the taxes flow through to the individual partners and are reported on their personal income tax returns.
Investment Club
An Investment Club account is established by a group of people who meet regularly and pool their funds to invest in securities. Since most investment clubs are formed as partnerships, their dividends are realized capital gains and losses are passed through for tax reporting by the individual members.
Limited Liability
A Limited Liability account offers some of the most popular benefits of partnership and corporate accounts. It offers the pass through tax status of the partnerships and the limited personal liability of corporations. The liability of the company and its owners is limited to their investment. States that require two or more members are MA, SD and WY. TD Ameritrade offers accounts for legally established LLC’s.
Sole Proprietorship
A Sole Proprietorship account is established for a non-incorporated, single-owner business. With this type of account, the owner and the owner’s company are considered a single entity for tax and liability purposes.
Corporate (profit or non-profit)
A Corporate account is established by a legal entity, authorized by a state, ordinarily consisting of an association of numerous individuals. A corporation can acquire assets, enter into contracts, sue or be sued, and pay taxes in its own name.
Non-Incorporated
A Non-Incorporated account is established by non-incorporated, non-profit organizations. These are not chartered as corporations, therefore lacking the powers and immunities of a corporate enterprise.
Pension or Profit Plan
Pension or Profit Plan accounts are tax-exempt trusts that can be set-up by a company or self-employed individual for the purpose of retirement.
Small Business Plans
Accounts designed specifically for small businesses, these accounts make it possible for growing companies to attract and retain valuable employees by helping owners provide for their financial future.