PLEASE READ THE IMPORTANT DISCLOSURES BELOW.
E*TRADE or Morgan Stanley and its affiliates do not provide tax advice, and you always should consult your own tax advisor regarding your personal circ*mstances before taking any action that may have tax consequences.
The material provided by E*TRADE Securities LLC,E*TRADE Capital Management, LLC, Morgan Stanley or any of their direct or indirect subsidiaries, or by a third party not affiliated with E*TRADE is for educational purposes only and is not an individualized recommendation. This information neither is, nor should be construed as, an offer or a solicitation of an offer, or a recommendation, to buy, sell, or hold any security, financial product, or instrument discussed herein, or to open a particular account or to engage in any specific investment strategy.
Non-retirement individual and joint brokerage accounts, revocable trust accounts with no more than two trustees, inclusive of managed portfolios accounts are eligible to be pledged as collateral. Accounts must have at least $50,000 of eligible collateral to be pledged. Use of a Managed Portfolios account to secure a Line of Credit presents certain additional risks including potential disruption of the management of the account and the potential termination of the investment advisory services.
Investors should consider many factors before deciding which 529 plan is appropriate. Some of these factors include: the Plan’s investment options and the historical investment performance of these options, the Plan’s flexibility and features, the reputation and expertise of the Plan’s investment manager, Plan contribution limits and the federal and state tax benefits associated with an investment in the Plan. Some states, for example, offer favorable tax treatment and other benefits to their residents only if they invest in the state’s own Qualified Tuition Program. Investors should determine their home state’s tax treatment of 529 plans when considering whether to choose an in-state or out-of-state plan. Investors should consult with their tax or legal advisor before investing in any 529 plan or contact their state tax division for more information. Morgan Stanley Smith Barney LLC does not provide tax and/or legal advice. Investors should review a Program Disclosure Statement, which contains more information on investment options, risk factors, fees and expenses, and possible tax consequences. Assets can accumulate and be withdrawn federal income tax-free only if they are used to pay for qualified education expenses, including tuition, fees, room and board, books and supplies. Earnings on nonqualified distributions will be subject to income tax and a 10% federal income tax penalty tax. State taxes may apply. If an account owner or the beneficiary resides in or pays income taxes to a state that offers its own 529 college savings or prepaid tuition plan (an “In-State Plan”), that state may offer state or local tax benefits. These tax benefits may include deductible contributions, deferral of taxes on earnings and/or tax-free withdrawals. In addition, some states waive or discount fees, or offer other benefits for state residents or taxpayers who participate in the In-State Plan. An account owner may be denied any or all state or local tax benefits or expense reductions by investing in another state’s plan (an “Out-of-State Plan”). In addition, an account owner’s state or locality may seek to recover the value of tax benefits (by assessing income or penalty taxes) should an account owner roll over or transfer assets from an In-State Plan to an Out-of-State Plan. While state and local tax consequences and plan expenses are not the only factors to consider when investing in a 529 plan, they are important to an account owner’s investment return and should be taken into account when selecting a 529 plan. Tax laws are complex and are subject to change. This information is based upon current tax rules in effect at the time this was written. Morgan Stanley Smith Barney LLC and its Financial Advisors do not provide tax or legal advice. Individuals should always check with their tax or legal advisor before engaging in any transaction involving 529 plans, Education Savings Accounts, trust and estate planning, charitable giving, other tax-advantaged investments, and other legal matters. Investments in a 529 plan are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so an individual may lose money. Zero coupon bondsmayexperience greater price volatility than interest bearing fixed income securities because of their comparatively longer duration.Municipal zero coupon bonds are generally tax-exempt; however,for taxpayers subject to the AMT, the accreted interest on somemunicipalbonds may be included in the AMT calculation. Municipal bonds are subject torules regarding the treatment of any market discount if such bonds arepurchasedin the secondary market below the bond’s original issue or accreted price.Zero coupon bonds are subject to interest-rate risk if sold before maturity and if interest rates rise, the value of the zero-coupon bond on the secondary market will likely fall. Please consult your tax advisor regarding the consequences of owning zero coupon bonds, as well as the applicable rules that apply to such bonds.
Line of Credit (“LOC”) is a securities based line of credit product, the lender of which is Morgan Stanley Private Bank, National Association, an affiliate of E*TRADE Securities LLC and Morgan Stanley Smith Barney LLC. All LOC lines of credit are subject to the underwriting standards and independent approval of Morgan Stanley Private Bank, National Association. The APR (Annual Percentage Rate) is calculated based on a 360-day year and includes both the interest rate and certain fees and other charges related to the loan. A processing fee, currently $10, will be charged for Line of Credit payments made by check. Other bank fees that may apply can be found here. Your interest rate will be a variable rate based on an index plus a margin. The index is currently the sum of two components: 1) the 30-day rolling compounded average Secured Overnight Financing Rate (SOFR), as published by the Federal Reserve Bank of New York and 2) a variable rate adjustment. The SOFR rate may be reset every business day (or the following business day in event of a holiday). The margin, or interest rate spread, is a percentage above the index. Your interest rate will increase or decrease based on changes in the index. LOC may not be available in all locations. Rates, terms and conditions are subject to change without notice. If any of the pledged collateral for your Line of Credit is held in a managed portfolio, failure to satisfy a maintenance call may result in the termination of any applicable advisory agreement. To be eligible for a LOC, a client must have a brokerage account at E*TRADE Securities LLC that contains eligible securities, which shall serve as collateral for the LOC. Other restrictions may apply. The information contained herein should not be construed as a commitment to lend. Morgan Stanley Private Bank, National Association is a Member FDIC that is primarily regulated by the Office of the Comptroller of the Currency. The proceeds from a LOC (including draws and other advances) may not be used to purchase, trade, or carry margin stock; repay margin debt that was used to purchase, trade, or carry margin stock; and cannot be deposited into an E*TRADE Securities LLC, Morgan Stanley Smith Barney LLC or other brokerage account.
You are required to maintain a minimum level of eligible securities in your collateral account. A decrease in the market value of your collateral may require you to deposit additional cash or securities. All collateral is subject to approval and Morgan Stanley Private Bank, National Association may change its collateral requirements at any time.
The amount you may be able to borrow will be based upon the eligible market value of your investments, at Morgan Stanley Private Bank, National Association's discretion. In some cases, due to certain risk factors like security concentration or liquidity issues, the amount you can borrow may be reduced.
Your applicable interest rate will be determined by your estimated credit line at the time of application and is subject to change. This rate is calculated based on a 360-day year. Rates are tied to the 30-day rolling compounded average Secured Overnight Financing Rate (SOFR), as published by the Federal Reserve Bank of New York, plus a variable rate adjustment, plus a margin. The SOFR rate may be reset every business day (or the following business day in event of a holiday). Processing fees may apply for payments made by check. Please see rates, fees and other important information at etrade.com/lineofcreditrates.
If any of the pledged collateral for your Line of Credit is held in a managed portfolio with Managed Portfolios, failure to satisfy a maintenance call may disrupt the management of the account and potentially result in the termination of any applicable advisory agreement.
Securities-based lending involves special risks and is not appropriate for everyone. Be sure to carefully review product details, risks and benefits to ensure this product is right for you. A decline in the value of your pledged collateral may require you to provide additional funds or securities. You can lose more funds than are held in the collateral account. A Line of Credit account is a full-recourse loan and you will be held liable for any deficiency. Morgan Stanley Private Bank, National Association can enforce a liquidation of any pledged collateral and can do so without contacting you first. You are not entitled to choose which securities in the collateral account are liquidated. Morgan Stanley Private Bank, National Association can modify its maintenance requirements at any time, without notice to you. You are not entitled to an extension of time to resolve a maintenance call. If your assets are liquidated, there may be adverse tax or other consequences. A Line of Credit is an uncommitted demand facility, which means the bank may demand full or partial repayment at any time or elect not to advance funds.
The content provided is for educational purposes only and neither is, nor should be construed, as an offer, or a solicitation of an offer, or a recommendation, to buy, sell, or hold any security, financial product or instrument discussed therein or to open a particular account or engage in any specific investment strategy.
Securities, investment advisory, commodity futures, options on futures and other non-deposit investment products and services are not insured by the FDIC, are not deposits or obligations of, or guaranteed by, Morgan Stanley Private Bank, National Association, and are subject to investment risk, including possible loss of the principal amount invested.
Banking products and services are provided by Morgan Stanley Private Bank, National Association, Members FDIC.
Securities products offered by E*TRADE Securities LLC (ETS), Member SIPCorMorgan Stanley Smith Barney LLC (MSSB), Member SIPC. Throughout 2023, ETS will be transitioning existing clients to MSSB. Learn more about this transition.
Investment advisory services are offered through E*TRADE Capital Management, LLC, a registered investment adviser.
Employee stock plan solutions are part of the Morgan Stanley at Work solutions and are offered by E*TRADE Financial Corporate Services, Inc.
In connection with stock plan solutions offered by E*TRADE Financial Corporate Services, Inc., E*TRADE Securities LLC provides brokerage services to stock plan participants.
E*TRADE Financial Corporate Services, Inc., and its affiliates do not provide legal, accounting, or tax advice. Always consult your own legal, accounting, and tax advisors.
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