Author Topic: Margin Call in my 401k???  (Read 5984 times)

dragoncar

  • Walrus Stache
  • *******
  • Posts: 9098
  • Registered member
Margin Call in my 401k???
« on: February 05, 2014, 10:37:10 AM »
Apparently something went funky with my "cash available to trade" on TDAmeritrade yesterday, as I now have a very small negative cash balance in my 401k.  This seems like something that the computer should be able to avoid.  My questions are - how should I handle this?

I still have a small deposit to the account coming up in a couple weeks.  Is that too long?
I could just sell 1 share, but would incur a commission.  Should I complain to them and ask them to waive the fee?
Is the IRS gonna get up in my bidness?

KingCoin

  • Pencil Stache
  • ****
  • Posts: 783
  • Location: Manhattan
  • Achieved FI @ 30
Re: Margin Call in my 401k???
« Reply #1 on: February 05, 2014, 10:43:38 AM »
Your administrator is going to be able to answer these questions much better than we are. Why not give them a call and figure out what the deal is? Sometimes things like this happen with trade settlement mismatches and the like.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 9098
  • Registered member
Re: Margin Call in my 401k???
« Reply #2 on: February 05, 2014, 11:05:19 AM »
I don't think they like to provide tax advice, and I'm trying to decide how soon I need to call.  Is this like step out of a meeting urgent?

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28271
  • Age: -999
  • Location: Seattle, WA
Re: Margin Call in my 401k???
« Reply #3 on: February 05, 2014, 11:10:11 AM »
I don't think they like to provide tax advice, and I'm trying to decide how soon I need to call.  Is this like step out of a meeting urgent?

Maybe not that urgent, but probably "stop posting on MMM forums to figure it out" urgent.  ;)

Ultimately it's not a huge deal - they may liquidate something you don't want them to, in the worst case.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

KingCoin

  • Pencil Stache
  • ****
  • Posts: 783
  • Location: Manhattan
  • Achieved FI @ 30
Re: Margin Call in my 401k???
« Reply #4 on: February 05, 2014, 11:34:35 AM »
I don't think they like to provide tax advice, and I'm trying to decide how soon I need to call.  Is this like step out of a meeting urgent?

Seems like more of an administrative question than a tax question. That is, how did more than 100% of your funds become invested? Again, it may be something like a fund paid a dividend which was reinvested before it hit your account.

Very unlikely to be a big deal. It's always nice to figure out what's going on though so you know how to handle the issue if it comes up on an ongoing basis.


dragoncar

  • Walrus Stache
  • *******
  • Posts: 9098
  • Registered member
Re: Margin Call in my 401k???
« Reply #5 on: February 05, 2014, 11:47:33 AM »
I don't think they like to provide tax advice, and I'm trying to decide how soon I need to call.  Is this like step out of a meeting urgent?

Seems like more of an administrative question than a tax question. That is, how did more than 100% of your funds become invested? Again, it may be something like a fund paid a dividend which was reinvested before it hit your account.

Very unlikely to be a big deal. It's always nice to figure out what's going on though so you know how to handle the issue if it comes up on an ongoing basis.

Ha - it's never even happened in my taxable accounts so... I dunno.  I trusted their indications of "cash available to trade".  I'll give them a call if this conference call ever ends.

yahui168

  • 5 O'Clock Shadow
  • *
  • Posts: 92
  • Age: 43
  • Location: CA
Re: Margin Call in my 401k???
« Reply #6 on: February 05, 2014, 03:57:33 PM »
I had this happen last week in a Roth IRA TD Ameritrade account that was not margin enabled. I contacted customer service and it's not technically a margin call but a "cash debit call" though I don't know there's an appreciable difference since you'll need to cover this shortfall. This is caused by a defect or oversight in their trading system that does not account for trading fees when looking at your available trading funds.

For example, if you have $500 dollars, the system will not allow you to buy $505 worth of stocks. However, it will allow you to buy $495 of stocks and charge you $10 in fees. Once that happens, you are now $5 in cash debit call. My trades were charged $30 in fees that I did not anticipate. I actually should have 500 free trades in the account but TD Ameritrade messed up and did not give me the free trades. It took about a week, but customer service I was able to give me back the free trades and reimburse me the $30 to my account to get rid of the $4 or so debit cash call in my account. I had the debt cash call for over a week

Unless there's some error on the side of TD Ameritrade like what I had above, you have to either put in money to cover the shortfall or sell some positions. It took a week for customer service to recover my free trades and my $30 so I was worried they would force sell 1 share of something and charge me $10 trade fees. Customer service says that is very unlikely as they do covers on a case by case basis and basically they have bigger fish to fry than my $4. It would be best to contact CS and ask if there's an issue in covering the call in a couple of weeks. You should also complain that the system has that flaw that I described that allows for a non-marginable account to execute a trade for more than funds in the account. That'll likely buy you the time you need.
« Last Edit: February 05, 2014, 04:04:39 PM by yahui168 »

dragoncar

  • Walrus Stache
  • *******
  • Posts: 9098
  • Registered member
Re: Margin Call in my 401k???
« Reply #7 on: February 05, 2014, 04:20:53 PM »
I had this happen last week in a Roth IRA TD Ameritrade account that was not margin enabled. I contacted customer service and it's not technically a margin call but a "cash debit call" though I don't know there's an appreciable difference since you'll need to cover this shortfall. This is caused by a defect or oversight in their trading system that does not account for trading fees when looking at your available trading funds.

For example, if you have $500 dollars, the system will not allow you to buy $505 worth of stocks. However, it will allow you to buy $495 of stocks and charge you $10 in fees. Once that happens, you are now $5 in cash debit call. My trades were charged $30 in fees that I did not anticipate. I actually should have 500 free trades in the account but TD Ameritrade messed up and did not give me the free trades. It took about a week, but customer service I was able to give me back the free trades and reimburse me the $30 to my account to get rid of the $4 or so debit cash call in my account. I had the debt cash call for over a week

Unless there's some error on the side of TD Ameritrade like what I had above, you have to either put in money to cover the shortfall or sell some positions. It took a week for customer service to recover my free trades and my $30 so I was worried they would force sell 1 share of something and charge me $10 trade fees. Customer service says that is very unlikely as they do covers on a case by case basis and basically they have bigger fish to fry than my $4. It would be best to contact CS and ask if there's an issue in covering the call in a couple of weeks. You should also complain that the system has that flaw that I described that allows for a non-marginable account to execute a trade for more than funds in the account. That'll likely buy you the time you need.

Yeah, I'm not too happy with them:
1) What kind of terrible financial software misreports available funds, and lets them go below zero? 
2) I have also had unexpected trading fees because they advertise certain "fee free ETFs" but you have to go to some hidden control panel to "enable" it.  And enabling it in my HSA did not enable it in my 401k.  (they did refund that one fee)

Annnyways....

You are right on the "cash debit call"  but it also says "margin alert" on the screen just to look scary.

I did call and basically told them, hey, I bought a fee free ETF.  If I sell now I'll have to pay a "short term trader" penalty or something.  But it's not a "fee" so they aren't able to refund it. 

They said that, as of now, there's no urgency but they "can't guarantee because market conditions might force a liquidation."  What?  This is NOT a margin account.  Market conditions will not increase or decrease my equity.  I'll need a couple weeks until my next paycheck deduction is made.  We are talking less than $100 here, so even if they do a forced liquidation it doesn't really matter.  I'm not worried about getting short squeezed or anything like that.

If they do a forced liquidation do they charge me a trading fee?  In which case I could ask them to refund it? 

Whatever, I don't care so much about the $10 trading fee so much as the principle that if they are screwing up something this simple, how can I trust their math on anything?  What am I supposed to do, pull out my last statement every time and then hand-reconcile each new transaction to make sure the number they say I have is real?

Rant over!  If you made it this far, congratulations.


soccerluvof4

  • Walrus Stache
  • *******
  • Posts: 5807
  • Location: Artic Midwest
  • Retired at 50
    • My Journal
Re: Margin Call in my 401k???
« Reply #8 on: February 06, 2014, 05:43:13 AM »
if your paying 10$ trading fee i would call and bitch. I am paying 7$. Also the free ETF program you need to Navigate is called DRIP. I have had similar issues but a phone call always takes care of things fairly easy. They have made alot of changes to there platform over the last couple of years and think that is whats causing alot of the issues. Having said that i agree it would be nice to not have the mess-ups but your situation like others said seems to be easily cleared up.

FrugalZony

  • Handlebar Stache
  • *****
  • Posts: 1496
Re: Margin Call in my 401k???
« Reply #9 on: February 11, 2014, 06:04:55 PM »

2) I have also had unexpected trading fees because they advertise certain "fee free ETFs" but you have to go to some hidden control panel to "enable" it.  And enabling it in my HSA did not enable it in my 401k.  (they did refund that one fee)

Thank you for ranting about this!!
It promted me to check and I realized I have been charged this fee as well and I had not been "enrolled"
Actually a while back I had called them and somebody had walked me through some things regarding fee free etfs etc.
Not a SINGLE WORD about having to enable it!!! I feel totally cheated. And the $5 fee is not easily detected until you do the math in detail (which you always should,
I know, I know!!)

I just called to complain and they will reimburse me for the last 30 days but not longer than that!
Whereas it's probably my fault for not catching this ealier, this is really not acceptable at all
I have written a message to them to see if I can get it all back or at least more than the 30 days.
If they won't budge I'll open an account directly with Vanguard

Thanks again!