Trading using 401K
- Thread starter Adobian
- Start date
I have only had a few futures brokers, but I believe that most of them do allow you to trade out of your IRA if you open a self-directed IRA. For instance, Trade Station and PFG Best allow it and I suspect that many other futures brokers do as well.
However, I strongly agree with you that most people who trade futures lose money, so they should not be speculating with their IRA money. However, if you have an edge and are consistently profitable, trading stocks or futures out of your IRA can save a lot of money on taxes. Compounded over many years, your IRA can grow much faster than a taxable account.
Unfortunately, index funds are far from a sure thing as many people have discovered in the last 2 years. The stock market has run up in the last 7 months, but there is no guarantee that we will not have another big decline in the markets in the future. Many people are beginning to realize that an active trader with some knowledge of fundamental and technical analysis can out-perform those who buy and hold in index funds.
Quote from saxon22:
So which brokerages allow trading futures using IRA?
most do - you must set up through your broker and a trust company. The broker will inform you how. There is going to be a quarterly fee PER BROKER AND PER ACCOUNT (like Roth vs. traditional IRA). Be prepared for a minimum charge of like $300 annually.
eg, mtrustcompany.com I think? They only require you keep $500 in your trust account, some others had required a sizable percentage (in the past). I believe IB uses a different trust company
No special fees on my IB IRA, just the regular monthly commission minimum ($10).
All the info is here:
http://individuals.interactivebrokers.com/en/general/education/faqs/ira.php?ib_entity=llc
1) do your trade futures? in a self-directed IRA?
2) is this your trustee?
The Delaware Charter Guarantee & Trust Company, doing business as Principal Trust Company, a Company of The Principal Financial Group, will act as the Custodian for all IB IRAs. As Custodian, Principal Trust Company will handle certain functions, including acting as trustee for the retirement plan; maintaining such plans in compliance with applicable federal laws and regulations; maintaining account information, and preparing and filing IRS forms on behalf of Interactive Brokers. Principal Trust Company's address is 1013 Centre Road, Wilmington, Delaware 19805.
I trade futures in a SEP-IRA that I opened with IB in 2006.
I don't know who is the trustee, all of my interactions have been directly with IB (setting up the account, making additional contributions, etc)
From my online statement:
Account Information
Name xxxxx
Account Uxxxxxx
Account Type Individual
Customer Type IRA-SEP
Account Capabilities Reg T Margin
Trading Permissions SSF,Stocks,Options,Bonds,Forex,Futures,Futures Options
Base Currency USD
Interesting. Usually setting up a futures IRA through a trustee is a pain in the butt and extra annual cost. If true, sounds like something IB should advertise a little.
No. Get a conventional, fixed rate, mortgage at historically low rates right now. Take a tax deduction for the mortgage interest paid, and pay the mortgage off with devalued dollars.
Put your 401K in only stocks that pay 2% or more in dividends and have a history of growing their dividends. The better the outlook for dividend and capital gains growth, the lower the dividend rate you can accept. Emphasis should be on stocks paying 3 % or more. Don't hold any non-dividend paying, gee whiz, stocks. And don't buy mutual funds including index funds. Make sure you have Global representation in the strongest economies and in stocks that will benefit from inflation in the US economy. Commodities, liquor/beer, cigarettes, consumer staples, nursing homes. Don't take on too much risk and keep an eye on things.. (Include at least one financial, but make sure it is sound and paying a good dividend [bank of Hawaii, Bancorp South, etc.]. These banks will return outsize capital gains in coming years because even the good banks have been hurt by association.)