Career Fantasy

S

ShoeshineBoy

Okay, I’m going to let you guys in on my career fantasy. The problem is that I don’t know if it’s a fantasty that could one day become a beautiful reality or if it is just a Pipe Dream because of tax code or something else that I’m not taking into account.

Things have been going pretty well in the Roth IRA of late: I’m making consistent gains. Now let’s suppose I can keep that up for 5 years and end up with, say, a million in that account. Someone let me know if the following is doable with that million:

1. I pull out about 500,000. If I do that, I’ll have to pay taxes on the 500,000 which will be around 25% plus I’ll have a 10% penalty. That will leave me with about 65% of the original or around $330k.
2. Leave the original $500k in the IRA and continue to build it up for retirement.
3. Trade off of the $500k. If I can swing trade even 33%, that’s $165,000/year.

So what do you think? Has it been done? Will the IRS stop me?

I know I have to give some money to the IRS, but to me it would be worth it to be able to retire early.
 
It's possible. I know a guy who had less than $150K in his retirement account. He took it out, paid the penalties/taxes, quit his job and began trading full time. Worked his account to over 7 figures - bought some land on a big lake, had a $2mm custom place built. Sweet.
 
You don't pay any penalty out of a roth
from withdrawing out your own after tax contributions that you made into it

Quote from ShoeshineBoy:

Okay, I’m going to let you guys in on my career fantasy. The problem is that I don’t know if it’s a fantasty that could one day become a beautiful reality or if it is just a Pipe Dream because of tax code or something else that I’m not taking into account.

Things have been going pretty well in the Roth IRA of late: I’m making consistent gains. Now let’s suppose I can keep that up for 5 years and end up with, say, a million in that account. Someone let me know if the following is doable with that million:

1. I pull out about 500,000. If I do that, I’ll have to pay taxes on the 500,000 which will be around 25% plus I’ll have a 10% penalty. That will leave me with about 65% of the original or around $330k.
2. Leave the original $500k in the IRA and continue to build it up for retirement.
3. Trade off of the $500k. If I can swing trade even 33%, that’s $165,000/year.

So what do you think? Has it been done? Will the IRS stop me?

I know I have to give some money to the IRS, but to me it would be worth it to be able to retire early.
More...
 
What happens in year 1 of the new venture if you are down 20%? So you are down 20% plus all withdrawals you need to make to live. What happens if you are down the first 4 months of the year and cannot really make any withdrawals?

$300K is not enough to live entirely off of given the trading risks.
 
Quote from rockn:

You don't pay any penalty out of a roth
from withdrawing out your own after tax contributions that you made into it
More...

Isn't there a retirement age, say 59 1/2 or something, that they want you to wait until before you start pulling anything out of it? I thought there was a 10% penalty if you pulled out before that?
 
Quote from optioncoach:

What happens in year 1 of the new venture if you are down 20%? So you are down 20% plus all withdrawals you need to make to live. What happens if you are down the first 4 months of the year and cannot really make any withdrawals?

$300K is not enough to live entirely off of given the trading risks.
More...

Good point and I definitely admit I hadn't thought all the way through that.

However, the way I trade is pretty steady and non-volatile: I use no margin, long only and a fixed acct %/trade. Furthermore, I use only stocks that are very steady (at least compared to the NASDAQ issues I started with).

But you're right: I need to ask myself even harder q's than you posed actually and I agree 300k isn't enough. You've inspired me to look - for what it's worth of course - at some of my backtested numbers and come up with some parameters...
 
Quote from RL8093:

It's possible. I know a guy who had less than $150K in his retirement account. He took it out, paid the penalties/taxes, quit his job and began trading full time. Worked his account to over 7 figures - bought some land on a big lake, had a $2mm custom place built. Sweet.
More...

Wow! Your friend is definitely "balls to the wall".

Thx for the inspirational story...
 
Yeah.. quitting your job to trade 150K left in a retirement account (probably 100K after taxes/penalties), is at minimum a huge gamble.
 
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