Features & Services Section

Introduction to Limited Margin

Overview

Limited Margin is a feature allowing your client to use some, but not all, potential benefits of a margin account in their IRA. The Limited Margin feature allows for trading on unsettled funds, as well as the ability to trade option spreads when combined with the appropriate level of options trading approval. 

To qualify for the Limited Margin feature, your clients must meet the following account eligibility requirements.

Required documents

  • Submit a completed Supplemental Application and Agreement for Limited Margin and Trading Option Spreads in your IRA Account form.
  • To qualify for option spread trading in an IRA account, you should also submit a completed Options and Margin Application with the appropriate strategy selected.
FeesNo set-up fees
Minimums
  • Account must meet Schwab’s minimum account equity requirement of $5,000 for either Limited Margin or spread option trading in the account.
  • A cash balance equal to or greater than the requirement to exercise the options in the IRA must be maintained on the last day prior to option expiration.
Supported activities
  • Use of unsettled funds for trading
  • Option spread trading in an IRA
Non-supported activities
  • Margin balances
  • Margin loans
  • Short stock positions
Eligible account typesIneligible account types
  • Rollover IRA
  • Roth IRA
  • Roth Conversion IRA
  • SEP & SIMPLE IRAs (single owner plans)
  • Traditional Contributory IRA
  • 401(k) accounts
  • 403(b) accounts
  • All Tenants by Entirety
  • Charitable and non-profit organizations
  • Community Property
  • Company retirement accounts (CRA)
  • Conservatorships
  • Custodial
  • Custodial IRAs
  • Designated beneficiary individual
  • Designated beneficiary community property WROS
  • Designated beneficiary joint tenant
  • Estate Accounts
  • Guardianships
  • Incorporated: C or S corporation; non-incorporated: sole proprietorship, limited liability company, partnership, non-incorporated association
  • Individual
  • Inherited and Minor Inherited IRAs
  • Joint Tenants with Rights of Survivorship
  • Life Tenancy
  • Living Trust
  • Personal choice retirement accounts
  • Qualified retirement plans (QRP)
  • Stock liquidation service accounts
  • Tenants in Common
  • Testamentary Trust (if allowed by trust)
  • Uniform gift to minors act (UGMA) accounts
  • Uniform transfers to minors (UTMA) accounts
  • Usufructory

Will margin interest be charged in a Limited Margin enabled IRA account?
The Limited Margin feature doesn't allow the account to carry a margin balance, so there is no need to charge interest.

Introduction to options trading
Introduction to margin

The following are available through Forms library:

Options Trading and Margin Application
Agreement for Limited Margin and Trading Option Spreads