Self-Directed Brokerage

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TD Ameritrade Self-Directed Brokerage

As part of its responsibility for overseeing the assets held by the 401(k) Plan, the Farm Credit Foundations Trust Committee works with its investment consultant to carefully structure an investment lineup of diversified strategies and superior investment funds.

This includes constructing an array of investment fund options that will enable participants with wide-ranging risk / return profiles to select a combination of funds that will help them meet their strategic, long-term objectives.

From time to time, plan participants are interested in investment options that are not available in the Farm Credit Foundations Defined Contribution / 401(k) Plan (the “401(k) Plan”). The 401(k) Plan features an “open brokerage window” option that allows participants to select investments outside of the pre-established funds (e.g. any publicly traded stock/mutual fund, exchange traded funds, bonds, certificates of deposit, and options). This can be used by participants to augment the current diversified choices with other investments in which they are interested. You can invest up to 99% of your balance in the self-directed brokerage account.

Although there is no annual account maintenance fee for the TD Ameritrade self-directed brokerage, there are transaction fees (see below for additional fees for trading option contracts):

  • Trade executed via internet = $6.95

  • Trade executed via Interactive Voice Response = $14.99

  • Trade executed via licensed broker = $24.99

  • (additional $5 fee for all limit, stop, and stop-limit orders)

More Information

TD Ameritrade Service Guide
TD Ameritrade Brochure
TD Ameritrade Fee Schedule

 

Options

Effective July 1, 2008, the ability to write covered calls and purchase long options became an additional feature to the TD Ameritrade self-directed brokerage account arrangement through the Farm Credit Foundations Defined Contribution/401(k) Plan.

Writing a covered call is an option strategy in which a call option is written against an equivalent amount of long stock. Example: Writing 2 XYZ May 60 calls while owning 200 shares or more of XYZ stock. A long options position represents the owner’s right to buy (long call) or sell (long put) the underlying security at the strike price for a pre-determined length of time.

Keep in mind that the above transactions may not be suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. You may wish to consult with your personal investment or tax advisor as well as obtain a clear explanation of all commissions, fees and other charges for which you may be responsible.

 

Options' Application and Approval Process

TD Ameritrade requires you to complete an application that is reviewed and approved by TD Ameritrade before these features would be available to you. Please note that not all account-holders will qualify. Following are the necessary steps to be taken to request the ability to write covered calls and/or purchase options on your TD Ameritrade account:

  • Step 1: Complete the Plan Participant and Plan Trustee Account Form – Options Application available on this site, or from John Hancock through MyLifeNow at mylife.jhrps.com, and fax the form to the Farm Credit Foundations benefits department at 267-295-8011 or email the form to the benefits department at Benefits@FarmCreditFoundations.com.

  • Step 2: Application is reviewed by TD Ameritrade. (Note: The standard processing time is 3-5 business days.)

  • Step 3: If approved, TD Ameritrade provides an options confirmation letter and a hard copy of the Options Clearing Corporation’s Option Disclosure Document “Characteristics and Risks of Standardized Options” (An electronic copy of this document can be found at the OCC’s website). Please read Characteristics and Risks of Standardized Options before investing in options.

  • Step 4: Once approved, you may call and place option orders with a TD Ameritrade options broker (not available through website). Brokers are available 7 a.m. to 6 p.m. Monday - Friday by calling 1-866-766-4015.

  • Step 5: Position is segregated on TD Ameritrade website via your personal account. Option order status and current option positions may be reviewed online.

Fees

Please note the following fees associated with these transactions:

  • Option Trade Commission
    $6.95 per trade plus $0.75 per contract. A contract is the Unit of Trading for that option. A standard equity option contract would typically represent 100 shares; however, many exceptions apply. Please consult the Options Disclosure Document for additional information.

  • An Exercise or Assignment Fee Assessed at Time Stock Moves
    $30 exercise or assignment timing depends on the type of option. An exercise can be voluntary or involuntary, while an assignment can only be involuntary. Please consult the Options Disclosure Document for additional information.

    Brokerage services provided by TD Ameritrade, Division of TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. Used with permission. TD Ameritrade is an independent entity and not a corporate affiliate of Farm Credit Foundations.

 More Information