Trading using 401K

Adobian · Oct 7, 2008

Quote from thegazelle:

I'm in a roth 401k at the small shop I trade for. We can do stocks/options , and I believe futures as well, but don't quote me on the futures.

Yes, too.

I have called Schwab. They said it's true that I could buy and sell stock in my account

MiniDowTrader · Oct 9, 2008

Through my employer I'm permitted to move as much of my 401k as I like into a "Self-Directed Brokerage Account" with Ameritrade. This account does not allow short sales, margin trading, futures, options or commodities.

saxon22 · Oct 9, 2008

Can it be transferred to an account that does allow futures trading?

jethrodull · Oct 17, 2008

Quote from saxon22:

example 1.

you have 250K in IRA account. It gets converted into self managed IRA and thus it is still 250K. Now you trade the account and at the end of the year you got 300K. You decide to take out that 50K. If you are < 59 years old then 5K is the penalty and then you will get a statement for your taxes where it would say that you had an income of 45K (on top of wahever else you had made that year) which will be added to your total income on your 1040 sheet.

Example 2: same scenario except for the age. If you are >59 then there is no penalty and you get to keep the 5K. However, you do end up paying income tax on the amount no mater the age.

Good Luck!

almost right on example 1....you would be receiving a 1099R for the full 50k, meaning it is all taxable, AND THEN you would also have the 10pct penalty...

J

saxon22 · Oct 17, 2008

So I would have to pay 5K which is the penalty plus tax on the 50K? It hurts!

TraderZones · Oct 20, 2008

Quote from saxon22:

So I would have to pay 5K which is the penalty plus tax on the 50K? It hurts!

Just roll your 401K into an IRA, and problem gone. Why is this hard?

Div_Arb · Oct 20, 2008

I trade the crap out of Direxion 2.5x funds in my Schwab 401k. My employer has it set up so its 100% self directed. I can buy any stock/ETF/CEF or mutual fund. No short selling, options, or futures, but I use Direxion and Ultra Pro funds for shorting and leverage.

Div_Arb · Oct 20, 2008

You only have to quit your job to do it so finding a new job should be no problem, right?

Quote from TraderZones:

Just roll your 401K into an IRA, and problem gone. Why is this hard?

saxon22 · Oct 17, 2009

It seems that trading 401K without converting it to IRA is the trick to master. Also, for some reason, futures trading using 401K is not allowed, (featured?) by most firms. Wonder why?

jrlvnv · Oct 17, 2009

Quote from Adobian:

I planned to borrow from mo\y 401K account in the future, if I make enough. The borrowed money will be invested in a house. Then I will make monthly payment back to my 401K account. Is this a good scenario?

Only if you like to get double taxed on the money you pay back.