suggestion: Mutual Fund partner for IB IRAs
- Thread starter amg
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http://www.elitetrader.com/vb/showthread.php?s=&threadid=19331
says
"if you trade more than 25% of your retirement account assets, the IRS may deny the tax-deferral benefits of the account"
any pointers to official IRS point-of-view on this?
says
"if you trade more than 25% of your retirement account assets, the IRS may deny the tax-deferral benefits of the account"
any pointers to official IRS point-of-view on this?
Nonsense. Many futures brokers offer 'self-directed' IRAs in which you can trade essentially all of your account. I've perused the IRA tax workbook - one can purchase real estate, antiques and most any type of asset in an IRA. The IRS admits it can't even afford to pursue known tax evaders - that they would crack down on actively managing an IRA is just south of ludicrous.
Re GreentraderTax' comments: The consultants/advisors always want to make it sound more esoteric and borderline than it really is in order to increase the perceived value of their services. One has to listen critically and reach their own conclusions.
None whatsoever.
The fundamental difference between investing and trading is your holding period. They are otherwise indistinguishable. The IRS couldn't care less what your average holding period is.
The only relevance is if a broker actively encourages churning funds that are meant for retirement. That is an issue between the client, the broker, and the courts however. Given that the IRS wasn't going to collect taxes on the funds anyway, it doesn't have an interest in the matter.
Stupid question for def (or anyone): I thought that margin was not allowed in tax-deffered accounts and that was the reason for the inability to go short. If this is true, how can one trade futures in IB's IRAs since futures trading requires margin? Please set me straight, I've just rolled over a substantial 401k into an IB IRA.
Uni
In this instance you are using the term 'margin' too losely. The prohibition is on purchasing assets for an IRA with borrowed funds. When you purchase shares on margin, that is what you are doing - buying shares w/ funds borrowed from your broker.
When you post 'margin' on a futures position you are not borrowing funds but posting a bond as security against potential losses. There is no prohibition on futures per se, long or short, in an IRA.
Uhhh ... did I get that right?
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