synthetic margins in iras

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paulwall

Because you can't margin an IRA account, is it possible to deposit a larger amount than your annual contribution limit in an IRA temporarily in order to allow you to cover short term stock sales that would normally exceed your cash balance?

Ex. Assume your traditional IRA currently totals $5000 as a result of this year's maximum contribution.

You then buy and sell $5000 worth of stock A on Monday morning and make a $1000 profit. Using your proceeds, in the same day, you then buy $6,000 worth of stock B in the afternoon. Normally, you'd have to wait till Thursday in order to sell stock B because your sale of stock A hasn't cleared yet. However, if your broker let you temporarily deposit $6,000 in cash in your IRA account, you could then sell stock B Monday afternoon, because you have the cash to cover the sale. Can this be done?
 
nope!

If your broker allows it, he will be fined, and you will be fined and spanked for exceeding the maximum annual IRA contribution.

Trade Futures in your IRA, or come up with a better way to scam the IRS!
 
Quote from paulwall:

Because you can't margin an IRA account, is it possible to deposit a larger amount than your annual contribution limit in an IRA temporarily in order to allow you to cover short term stock sales that would normally exceed your cash balance?

Ex. Assume your traditional IRA currently totals $5000 as a result of this year's maximum contribution.

You then buy and sell $5000 worth of stock A on Monday morning and make a $1000 profit. Using your proceeds, in the same day, you then buy $6,000 worth of stock B in the afternoon. Normally, you'd have to wait till Thursday in order to sell stock B because your sale of stock A hasn't cleared yet. However, if your broker let you temporarily deposit $6,000 in cash in your IRA account, you could then sell stock B Monday afternoon, because you have the cash to cover the sale. Can this be done?
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You can set up an IRA trading account with all the possibilities offered in brokerage accounts including naked shorting of any instrument you wish.

You just need to know how.
 
At what step in this process would I be prevented from doing this? I mean I really don't think my broker is going to prevent me from depositing more money than my max. contribution into my IRA.

Obviously, I would withdraw the excess contribution or any interest I made from it before the end of the year. I could even recharacterize the excess amount to a roth or a 401k plan that I have...yes, no?
 
Just trade futures in your ira, you can trade it like a normal futures account, i trade minis with mine. Its easier and legal. I trade thru velocity , tradestation and openecry
 
Quote from rsikit:

Just trade futures in your ira, you can trade it like a normal futures account, i trade minis with mine. Its easier and legal. I trade thru velocity , tradestation and openecry
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Dumb question. When trading futures, do you need the full contract value of the instrument in your account? I thought IRA were cash accounts and not a margin accounts. ie: If trading NQ.......do I need $2750 per contract or $39000? I have an IB Roth.
 
Quote from reiehaxm:

Dumb question. When trading futures, do you need the full contract value of the instrument in your account? I thought IRA were cash accounts and not a margin accounts. ie: If trading NQ.......do I need $2750 per contract or $39000? I have an IB Roth.
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trading futures looks no different than trading outside your IRA.
 
Quote from reiehaxm:
If trading NQ.......do I need $2750 per contract or $39000? I have an IB Roth.
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You only need a $2,750 "performance bond" per NQ contract in an IRA!
 
Yes what ever the margin is at a futures broker, whether its 1k per car 500$ per or whatever thats the margin you need. Just like traderzones and surdo said
 
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