Decisions, Decisions....Taxes

[funky]

Could someone tell me whether I should form my own 401k and trade it (for tax-free profits), or trade with a foreign tax-free account.

I understand that the 401k can be setup through a C Corp, with the maximum contribution for me and my fiance being 41k x 2, or 82k a year.

On the other hand, I could form a IBC, and trade with a U.S. broker here in the U.S., with a foreign bank.

I understand some things, but if anyone could clear up the ramifications about both these options, I would very much appreciate it.

Also, I understand that all money that would need to be taken out periodically, would be taxed eventually.

funky

 

[traderstatus]

Wouldn't an IBC owned solely by an USA citizen, resident individual be subject to IRS taxes? IRS Form 8621 and others?

The 401K/Profit sharing is a good idea, then all you two might need to do is get a couple of six figure self-employed earned incomes to allow you each to fund them!

 

[Free Thinker]

i wouldn't mess with that overseas stuff. the irs is cracking down more on things like that every day. you could find yourself with a big problem eventually.
the roth ira is the ultimate trading vehicle. no tax ever. the best way would be to roll your retirement money into a roth and trade from there. roth money comes out tax free. if you trade in a tax deferred account such as a 401k the money comes out as ordinary income. if you make money you could find yourself with a hefty tax bill in retirement with a tax deferred plan. another benifit to the roth is the ability to withdraw contributions tax free after only five years.
the tricky part is getting money into the roth. if you already have retirement money you can roll it into a roth but if you are a trader you don't have earned income so you cant contribute to a retirement account unless you set up an entity. this would be a good place to kick around ideas about how a trader could get money into a roth without setting up an entity.

 

[funky]

Quote from traderstatus:

Wouldn't an IBC owned solely by an USA citizen, resident individual be subject to IRS taxes? IRS Form 8621 and others?

The 401K/Profit sharing is a good idea, then all you two might need to do is get a couple of six figure self-employed earned incomes to allow you each to fund them!

well, that is why i'm asking for professional opinions. they are definitely no ways around taxes (that is not what i'm trying to do here), rather ways to 'defer' taxes until the money is needed.

that is why i drew the parallel to it, which is like a 401k, where i can stuff 82k a year behind it. but i would want to trade the account as well. i know there are self-managed 401ks out there, but i'm wondering how feasible it is, if anyone has tried it or knows of people who do it.

 

[funky]

Quote from vhehn:

i wouldn't mess with that overseas stuff. the irs is cracking down more on things like that every day. you could find yourself with a big problem eventually.
the roth ira is the ultimate trading vehicle. no tax ever. the best way would be to roll your retirement money into a roth and trade from there. roth money comes out tax free. if you trade in a tax deferred account such as a 401k the money comes out as ordinary income. if you make money you could find yourself with a hefty tax bill in retirement with a tax deferred plan. another benifit to the roth is the ability to withdraw contributions tax free after only five years.
the tricky part is getting money into the roth. if you already have retirement money you can roll it into a roth but if you are a trader you don't have earned income so you cant contribute to a retirement account unless you set up an entity. this would be a good place to kick around ideas about how a trader could get money into a roth without setting up an entity.

thanks. i don't have an efficient way to get money into a roth, so that is why i'm focusing on the 401k tax-free trading vehicle. i'm well aware of the tax implications, and have done the math. i just need to find out how to setup such a system, and if there are better alternatives. imagine 82k every year, tradable, tax-free for life until you decide to take it out. do a comparison compounding money with and without on a daily basis, its unbelievable.

 

[traderstatus]

Many traders have 401K/Profit Sharing plans and yes, they sock away $13,000 or more up to $41,000 a year. Search Google for the string "My Retirement Plan Options" to get more information on these. Perhaps that might help you get started.

 

[Free Thinker]

Quote from funky:

thanks. i don't have an efficient way to get money into a roth, so that is why i'm focusing on the 401k tax-free trading vehicle. i'm well aware of the tax implications, and have done the math. i just need to find out how to setup such a system, and if there are better alternatives. imagine 82k every year, tradable, tax-free for life until you decide to take it out. do a comparison compounding money with and without on a daily basis, its unbelievable.

i havent figured out how to get a large amount of money into a roth either. im sure there is a way.
maybe the thing to do would be to set up the entity and 401k for a couple of years and contribute the max and then roll it into a roth. you would pay tax on the money while its still a small amount and then be able to compound and withdraw tax free. best of both worlds.

 

[funky]

wow, i'm very surprised at how many people don't read the posts. they maybe read 1 or 2 lines and then respond. would you do that in real life?

anywhoo, look, i am quite capable of learning about various options. in fact, amazingly, i have some good information on these options. so then i got even more crazy, and learned about them some more! finally, i decided to start asking around for people's experiences, and what they thought were the best ideas for me.

thank you really for responding but seriously, people in the future please don't respond to this thread unless you have experienced one of these setups. then, if you have, please post away your thoughts about them, what you have learned, blah blah blah, yada yada yada.

peace
-funky

Quote from traderstatus:

Many traders have 401K/Profit Sharing plans and yes, they sock away $13,000 or more up to $41,000 a year. Search Google for the string "My Retirement Plan Options" to get more information on these. Perhaps that might help you get started.

 

[funky]

again,

thanks vhehn for your posts. i'm very touched at how much some people try to help.

iras are nice for people who want to slowly build wealth; right now i'm amassing my wealth rather quickly and want to start planning on how to increase the efficiency of my take.

i've decided on a 401k account that is tradable by me OR a foreign entity/account traded here with a U.S. broker.

peace
-f

Quote from vhehn:

i havent figured out how to get a large amount of money into a roth either. im sure there is a way.
maybe the thing to do would be to set up the entity and 401k for a couple of years and contribute the max and then roll it into a roth. you would pay tax on the money while its still a small amount and then be able to compound and withdraw tax free. best of both worlds.

 

[funky]

its amazing how quickly the tax guys respond to simple stuff, yet, somehow, completely 'miss' the posts asking questions of matters that they can charge for