Why does Schwab need my SSN

Why Does Charles Schwab Need SSN (Social Security Number)?

2023: why is Charles Schwab asking for SSN (Social Security Number), my employer information and address when opening a brokerage account? Is it safe to give Charles Schwab my SSN?

Why Is Schwab Asking for My SSN?

When you apply for a Schwab brokerage account, you will be asked for your Social Security Number or other tax ID number. Don’t be too concerned about this. There are several good reasons why Schwab would ask for this information. Here are the details:

Schwab Must Comply With U.S. Government Regulations

There are several instances where the U.S. government requires Schwab to identify its customers. These include:

1. Compliance with tax laws. Uncle Sam likes to tax financial accounts... a lot. Even so-called tax-advantaged accounts can be taxed in various situations, such as when you make a withdrawal from a Traditional IRA.

If you sell a security, the IRS wants to know about. It wants to know who you are and how much you gained or lost. These details are sent to the tax agency along with, you guessed it, your Social Security Number.

2. Compliance with the Patriot Act. Passed in 2001, this federal law requires financial companies like Schwab to identify their customers when they apply for accounts and keep records of these events. To follow the Patriot Act, Schwab will want some information from you when you apply for an account in order to know who exactly you are. The broker can accomplish this in multiple ways, one of which is to get your Social Security Number.

3. Keeping Track of Account Ownership. Two people could have the same name or same birth date, but they won’t have the same Social Security Number. For this reason, financial groups like to use Social Security Numbers to keep tabs on who owns accounts. This is important because brokers like Schwab need to know who has trading privileges in an account, and who doesn’t.

Charles Schwab and Competitors

Protection of Your Information at Schwab

When you hand over your particulars, Schwab knows how important that data is to you. That’s why the broker has several policies in place to defend your information.

One protocol Schwab has is account alerts. You can easily sign up for this inside your Schwab account for both investment and bank accounts. For example, if Schwab detects any suspicious activity with your Schwab debit card, it will send you a text message. You can turn this feature off if you want.

Voice ID, constant monitoring, and two-step verification are other strategies that Schwab uses to make sure that unauthorized parties aren’t able to use your account.

why does charles schwab need my employer

Possible Substitutes for a Social Security Number

If you’re still hesitant to give out your Social Security Number, there are some other options you have. Schwab permits the use of other tax numbers when opening certain account types. These include trusts and business accounts.

Tax ID numbers that you may be able to use at Schwab instead of a Social Security Number include the Individual Taxpayer Identification Number (ITIN) and an Employer Identification Number (EIN). Form SS-4 is used to get an EIN, while Form W-7 is what you need to get an ITIN.