Moving cash into a money market mutual fund follows the same procedure as buying a regular mutual fund. This will deliver an online tool to switch to SIPC coverage. Next, find the edit link next to “cash sweep” under the Elections & routing section. On the next page, select the General tab. To do this, hover over the Client Services tab in the top menu and select My Profile from the list of choices in the drop-down menu. This can easily be changed to SIPC coverage on the website. The IDA system is the default core position inside a TD Ameritrade account. PTD (pattern day trading) accounts can only use the SIPC option for idle cash. Moreover, a cash balance at this level will still be earning the standard APY of 0.35%. This auxiliary policy is through London insurers and is good for $2 million of cash. The one advantage of the SIPC program is that TD Ameritrade has a supplemental insurance policy to backstop the SIPC policy if it is exhausted. Currently, that rate is the same rate that the FDIC program pays: 0.35% annually. It will remain in the securities account earning interest. What exactly qualifies as a separate capacity could vary somewhat between the two insurance providers.Ĭash inside a brokerage account at TD Ameritrade that has elected SIPC coverage won’t be swept into a bank. The amount of insurance is the same: $250,000 per separate capacity. SIPC is funded by member broker-dealers rather than the U.S. However, it is through SIPC rather than the FDIC. TD Ameritrade offers an alternative to the IDA program. $0 commissions + transfer fee reimbursement. None of the money market funds have a load, Some are $0, while others haveĪ $1 million minimum initial purchase requirement. Investment minimums vary considerably among the money market funds. Schwab Value Advantage Money Fund® Investor Shares (SWVXX): 4.47%Ī very clear difference on a pre-tax basis. Schwab Treasury Obligations Money Fund™ Ultra Shares (SCOXX): 4.41% Schwab Municipal Money Fund™ (SWOXX) - Ultra Shares: 3.57%Īnd compare them to the fully taxable money market funds: Schwab California Municipal Money Fund™ (SWKXX) - Investor Shares: 2.83% For example, look at these two funds and their yields: They tend to deliver lower returns, however. Some of the Schwab funds invest in municipal bonds, which means there may be tax advantages with these funds in certain situations. Every one of them is a Schwab fund with at least a billion dollars in assets. This will produce a list of every money market mutual fund available to TD Ameritrade customers.Ĭurrently, there are 17 funds on the list. On the next page, there will be a row of tabs at the top of the site. To find the money market search tool, hover over the Research & Ideas tab in the top of the website and then select Families from the Mutual Funds sub-category. These funds are easily accessible inside a TD Ameritrade account thanks to the broker’s user-friendly website. Investors who want more than an annual return of 0.35% will find it a money market mutual fund. However, the Plus program pays the same interest rate on uninvested cash. This is for clients with over a million dollars in assets. TD Ameritrade also operates an IDA Plus program. The APY on TD Ameritrade’s bank-sweep program is currently Any existing deposits with these banks could reduce the maximum limit of insurance available through the IDA program. Currently, TD Ameritrade uses a variety of financial institutions, including Wells Fargo, Citibank, and affiliates of Charles Schwab Bank as its partner banks. Instead, the bank simply holds the money while it is available for trading inside the TD Ameritrade account.īecause TD Ameritrade uses multiple banks for the IDA program, it’s possible to get a larger amount of insurance than the standard $250,000 FDIC limit. When an account’s available cash balance is moved to a bank, the transfer doesn’t create a separate deposit account. Thus, the uninvested cash is protected by the FDIC rather than SIPC. This is a sweep system that moves idle cash from a brokerage account to a bank with FDIC insurance. The first cash option we’re going to look at is the Insured Deposit Account (IDA). It’s important to be aware of these differences as the rates of return can vary significantly. TD Ameritrade clients have multiple choices for handling free cash balances. $0 commissions + satisfaction guarantee at Charles Schwab.
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