Are trades in an IRA reported? (EVER?)
- Thread starter Toonces
- Start date
Genesis Securities, if I remember correctly.
The Dealio - An IRA must have a custodian that is a bank. No custodian on gods green earth wants to take the risk of allowing margin on an IRA. So...what to do? Roll your IRA's into a self directed profit sharing, etc. You can even do a profit sharing 401K combo. So , say you knock out 50K. You can pay yourself a 40K salary and tax defer 15K of that into your 401k and then match 25% of your 40K with your profit sharing which is another 10K. So out of 50K you dont pay taxes on 25K. Pretty nifty huh? Here is the good part...you are the trustee and beneficiary of this plan and hence no broker gives a rat's ass what you do in it since it in not a liability to them since they are not the custodian. Here is the bad part, you are the trustee (instead of the custodian) and hence you are responsible for maintaining the plan. So you need to work with a law firm to form and maintain this plan which is maybe 3K upfront and only a K a year or so to maintain it (find a firm with a strong ERISA practice). Also, the minute you start borrowing you end up causing UBTI (Unrelated Business Taxable Income) which is difficult to calculate correctly and basically requires the use of a very sophisticated accounting firm (out of the realm of many of the smaller firms). Also, if you have enough to get in with a big bulge bracket broker they all have offshore leveraged products which basically allow US entities to leverage without incurring UBTI and also circumvent reg T.
good luck!
good luck!
I have an IRA at IB and there's some confusion on thier site.
On this page it says:
http://www.interactivebrokers.com/en/accounts/tradingPermissions.php
"IRA accounts can only have cash trading permissions."
But in the account itself I have Margin selected. I haven't traded in that accoun tfor some time, so I can't say first hand what the story is.
Statements from the account tag it as a CASH account. Very confusing, aint it?
On this page it says:
http://www.interactivebrokers.com/en/accounts/tradingPermissions.php
"IRA accounts can only have cash trading permissions."
But in the account itself I have Margin selected. I haven't traded in that accoun tfor some time, so I can't say first hand what the story is.
Statements from the account tag it as a CASH account. Very confusing, aint it?
This has been an unanswered question on EliteTrader as long as I have been a member. Some people have claimed that high frequency trading in an IRA will eventually be flagged by the IRS and will be treated as UBTI - Unrelated Business Taxable Income. Other people have said that the IRA is the ultimate trading vehicle and that until there is a court case pertaining to this issue, it can be assumed that hyper-trading in an IRA is fine. My question is, who the hell is right? Show me some evidence.
I also know that if the IRS were to declare hyper-trading taxable in an IRA, that a lot of people would be screwed over not only in late taxes but interest on that tax.
Does someone have definitive proof on either side of the issue?
