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My employer deposits my check using direct deposit, into my checking account. I'd like to have the money deposited the same way into my Schwab brokerage account instead. I've found my account and routing numbers for Schwab. Are there any rules (tax implications or anything else) that make direct deposit to a brokerage account a bad idea?

Also, my employer's system asks if this is a checking or savings account. It is neither - is there any reason choosing 'checking' won't work?

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    Is this account covered by FDIC?
    – littleadv
    Commented Mar 21, 2022 at 19:54
  • @littleadv Excellent point thank you. "Brokerage Products: Not FDIC Insured". But I'm out of luck there anyway, since I invest my excess money anyway. I should open another question to see if anyone at all offers a brokerage account that's FDIC insured.
    – Ken - Enough about Monica
    Commented Mar 21, 2022 at 20:08

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Also, my employer's system asks if this is a checking or savings account. It is neither - is there any reason choosing 'checking' won't work?

Ask the broker. You will not be the first person faced with this issue.

Some employers/payroll processors allow the employee to specify multiple bank accounts. They also allow employees to put some are all of their money into a brokerage account.

This can be a great thing to do. It allows the employee to contribute money directly into their taxable investment account, or their IRA, Roth IRA. It can even be done to the get money directly into a 529 plan.

This allows you to skip your regular bank.

There should be no tax issue. The tax obligation is triggered by the payroll process, not where the funds are deposited.

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    I have done what you ask for years - just say ‘checking’. The reason they ask that is because some banks give customers with a checking and a savings account the same account number for both - and then obviously you need to pick which one you want.
    – Aganju
    Commented Mar 21, 2022 at 21:45
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Schwab may provide the checking/savings distinction along with the routing and account number. You may have to call/email Schwab to confirm, if it isn't listed. I've always just checked the "checking" box for such accounts (never with Schwab, though), and not had any issue. YMMV.

One consideration is that if you get it deposited to the brokerage account instead of your checking account (rather than in addition to), and this results in no automatic deposits to your checking account, you may end up running into fees with your checking account. Verify the fee schedule (and how to avoid each fee) for your checking account to avoid any unpleasant surprises.

The only tax implication is that this is income and you must pay income tax on it. This is already true whether it goes to your brokerage account or checking account, or gets handed to you as a paper check or as cash.

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