Types of Accounts
PFG offers a variety of account types. As you can see, you have a lot of choices – and some questions to ask yourself before you proceed.
- Who holds legal title to the assets in the trading account?
- Who has the authority to enter orders and trade the account?
- What happens to the account if you die?
There are tax and legal ramifications to these choices, and they vary from state to state. If you’re not sure which account type to choose, it’s smart to consult an accountant, attorney, or tax advisor before opening the account.
Individual / Sole Proprietorship: Assets held in an individual account are owned and may be used by only one person: You. A sole proprietorship is closely related in the sense that the account is registered to a business with a single owner who is, in effect, the business and therefore controls all of the assets in the account. If the individual or sole proprietor dies, the account assets pass to his or her personal estate. This is the most popular account type at PFG.
- Joint:
- If you’d like to trade with a spouse or friend, a joint account is your best bet. However, there’s an important distinction between a tenancy-in-common account and a right of survivorship account.
- Joint Tenants with Right of Survivorship:
- With Right of Survivorship, if one of the account holders dies, total interest and control of his or her share of the assets passes immediately to the surviving account holder.
- Joint Tenants In Common:
- As Tenants In Common, if one of the account owners dies, interest and control of that person’s share of the assets passes to his or her estate. Thus, if something were to happen to you, your share of the account would pass to the person or persons you’ve specified in your will.
Corporation: This account is owned and registered in the name of a chartered corporation. To open a corporate account, the organization will need to submit a corporate resolution (we provide the appropriate form in our account application) that approves the opening of the account and designates those officers, directors, or employees authorized to act on behalf of the company. The corporate secretary, as well as one other officer/director, must sign the application.
Limited Liability Company (LLC): This account is owned and registered in the name of a Limited Liability Company, a specialized form of company created pursuant to the laws of individual states with the U.S. This account is not available for use by non-U.S. companies. The company will need to designate those managing members, members, or other persons authorized to act on behalf of the company.
Partnership: This account type can be used when a formal partnership (with a partnership agreement and federal taxpayer ID number) – or an informal group of individuals – wishes to open a trading account. In either case, the PFG account would be registered in the name of the partnership itself. To open this type of account, the formal partnership must submit a copy of its partnership agreement, and only the general partner(s) need sign the account application. By contrast, in the case of the informal group of people trading together, every individual participating in the account must sign the application.
Trust: Trusts are separate, distinct legal entities, created by a formal trust instrument, under which the trustee(s) holds legal title to assets for the benefit of others, known as beneficiaries. To open a trust account at PFG, you must furnish the agreement creating the trust, along with a completed trust account application.
Custodial: When you open a trading account for a minor, it has to be as a custodial account, because minors are prohibited from trading futures and options directly. Custodial accounts are opened under the rules of the Uniform Gifts to Minors Act (UGMA). When the child turns 18, he or she will assume full title and control of the account. PFG requires the custodian of the account to personally guarantee and sign this type of account application.
Pension Plan / Individual Retirement Account: An IRA is a tax-deferred personal savings plan or, in some specific cases, a tax-free plan. Technically, it’s a trust account created and maintained for the exclusive benefit of you or your beneficiaries, so it must be established with a qualified and independent trustee. You may not be your own trustee. Thus, you must find a trustee for your IRA account, and you should be sure to verify that the trustee you select allows self-directed commodity futures and options trading.
While PFG neither endorses nor recommends any trustee, we do understand that some trustees permits self-directed commodity futures and options trading in IRA accounts. These trustees are:
To open an IRA account at PFG, just print an application from our site or request that we send you an application. Unfortunately, this account type cannot be opened using our electronic application.
Please note that we require the beneficiary of the IRA to sign and guarantee the account personally. Please send all the completed documentation to the trustee of your IRA, with instructions to open the PFG account on your behalf. A representative from the company serving as your trustee will then sign the account application and will forward it to us.
So what are you waiting for? Click here to open a PFG account now!