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Trading in an IRA?
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Trading in an IRA?

  #1 (permalink)
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Trading in an IRA?

This may not be the spot for my question, so please move this thread if there is a better location.

I am wondering if anyone has experience with trading/active investing through their IRA...?

I am about to open a SEP-IRA through my sole proprietorship, and I will have a solid chunk of change in this IRA...so I was just wondering what my options were in terms of how I could invest/trade it myself...

Also, if you have advice on who to open up the IRA through, I am all ears...

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  #2 (permalink)
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  #3 (permalink)
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Boomer34 View Post
This may not be the spot for my question, so please move this thread if there is a better location.

I am wondering if anyone has experience with trading/active investing through their IRA...?

I am about to open a SEP-IRA through my sole proprietorship, and I will have a solid chunk of change in this IRA...so I was just wondering what my options were in terms of how I could invest/trade it myself...

Also, if you have advice on who to open up the IRA through, I am all ears...

I trade futures and futures options in my IRA, and I know a couple of others who do also. There are a few trust companies that will set us your trust for you. You may want to ask your broker what trust companies they have worked with in the past.

You should contact your finance professional.

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  #4 (permalink)
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traderwerks View Post
I trade futures and futures options in my IRA, and I know a couple of others who do also. There are a few trust companies that will set us your trust for you. You may want to ask your broker what trust companies they have worked with in the past.

You should contact your finance professional.

Thanks for the info...I will speak with a finance person soon.

I just wanted to verify that you could actually trade in an IRA.

So there are no trade restrictions or anything like that?

You could theoretically start with 25K in your IRA, run it up to 500K and you would not pay taxes until you started to withdraw...is that correct?

What exactly does setting up a trust have to do with an IRA?

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  #5 (permalink)
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Boomer34 View Post
Thanks for the info...I will speak with a finance person soon.

I just wanted to verify that you could actually trade in an IRA.

So there are no trade restrictions or anything like that?

You could theoretically start with 25K in your IRA, run it up to 500K and you would not pay taxes until you started to withdraw...is that correct?

What exactly does setting up a trust have to do with an IRA?

Yes, you can start with 25K and ( if you are profitable ) run it up.

I know some floor traders traded out of their IRA's and they might be a better person who can chime in on this.

I do know you cannot treat it as an income account before retiring. If you do say, take money out every month, the IRS CAN convert it from an IRA. I am not sure about the details. Just a story I heard.

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  #6 (permalink)
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Boomer34 View Post
This may not be the spot for my question, so please move this thread if there is a better location.

I am wondering if anyone has experience with trading/active investing through their IRA...?

I am about to open a SEP-IRA through my sole proprietorship, and I will have a solid chunk of change in this IRA...so I was just wondering what my options were in terms of how I could invest/trade it myself...

Also, if you have advice on who to open up the IRA through, I am all ears...

I looked into this a while back. TradeStation will let you do this, but you have to open your IRA account with another firm, or transfer your existing one there. First you open your account with TS, then open an account with the other firm. At the time I was looking, that company was Millennium Trust (Millennium Trust Company). You can see some of their documents they require you to fill out or chat with a rep over there to find out what you need, restrictions, etc. I never went this route, so I don't know if there are restrictions.

I think I remember other platforms allowing IRA accounts. OpenECry comes to mind, but I'm not 100% sure.

Regards,
-C

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  #7 (permalink)
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Boomer34 View Post
Thanks for the info...I will speak with a finance person soon.

I just wanted to verify that you could actually trade in an IRA.

So there are no trade restrictions or anything like that?

You could theoretically start with 25K in your IRA, run it up to 500K and you would not pay taxes until you started to withdraw...is that correct?

What exactly does setting up a trust have to do with an IRA?

I have an IRA that I opened at Interactive Brokers specifically for this purpose ("rolled over" from another retirement account). I haven't traded live yet, so I can't speak to any pitfalls/gotchas - I would imagine that we're still restricted to the amount of additional funds that can be "contributed" ($5K in 2012? - 2012 IRA Contribution and Deduction Limits) unless rolling additional funds from an existing retirement account.

Once profitable, I would imagine money could be withdrawn (taking the "early withdrawal penalty" hit once) and moved into a taxable "trading account" that doesn't have any of the IRA penalties (and tax benefits though). Depends on if you're looking for monthly income or simply managing your own "hedge fund"

My .02 - this isn't my "day job" yet, so definitely ask an "expert" as well.

-Guy

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  #8 (permalink)
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Some brokerages aren't able to handle an IRA direct and will refer you to a Trust Company. Scottrade, Charles Swab , Fidelity and others allow you to set up an IRA with them.

The trust company will setup your SEP-IRA. Which you fund.

You tell them what brokerage account you want funded from your SEP_IRA. They transfer money from the SEP-IRA to the brokerage account.

You can trade stocks, futures etc. If it is setup correctly you can invest in alternative investments like real estate or precious metals.

You trade in your account just like a regular brokerage account.

Most brokers are familiar with this process.

Talk to a financial professional to decide what type of IRA to setup.

Hope that helps.

I'm just a simple man trading a simple plan.

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  #9 (permalink)
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Boomer34 View Post
This may not be the spot for my question, so please move this thread if there is a better location.

I am wondering if anyone has experience with trading/active investing through their IRA...?

I am about to open a SEP-IRA through my sole proprietorship, and I will have a solid chunk of change in this IRA...so I was just wondering what my options were in terms of how I could invest/trade it myself...

Also, if you have advice on who to open up the IRA through, I am all ears...

I like Fidelity for a 'stodgy' brokerage with an apparently strong financial position. Their commissions aren't terrible - 7.95 and they have a bunch -- 25 -- of commission-free ETF's whose only restriction is that if you sell them within 30 days, you have to wait until the position 'settles' before having the cash available for trading again. So, if you had a scale-in, buy the dip approach using say, the IVV or IWM ETF's, you won't be "commission penalized" by buying very small quantities that you could later sell into strength. I like this. 'dollar cost averaging' with some selectivity.

I'd also consider moving 'some' of your IRA to Interactive Brokers for more speculative trading, if you typically like to take smaller positions in individual equities/ETF's, building up to some total or even if not. You can buy up to 200 shares of any equity there for $1 per trip. Their pre-market trading opens at 4AM EST which is nice. So, the above scale-in approach works extremely well at IB. But the more shares you buy, the less favorable the commissions become, though they have several plans and they can be negotiated with. Plus, they have a very big range of products that you get access to without extra exchange fees. My only concern about IB, and I have no hard 'evidence' to base it on, so take it with a grain of salt, is that because they have such favorable margin rates (not applicable to an IRA of course) and 4:1 24X7 leverage for non-IRA equity and have some really large traders using it, I just wonder what would happen to them in some kind of meltdown situation. Insurance yes, but so what. But really, I have no idea, I am just paranoid after 2008. This is why I said 'some' of your IRA. I've never had any significant problems with IB though, using them for 10 years.

You may also want to consider Thinkorswim/TDameritrade, depending on what type of trading you are doing. I've just moved most of my stuff over there because I like the platform and am comfortable with TD's financial strength. You can also negotiate commissions down if you have a decent size account and/or are a frequent trader.

Lots of options .....

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  #10 (permalink)
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I currently use MTrust (Millenium) for my IRA futures account. They charge 300 dollar annual fee to hold your funds which kind of sucks. Only people that dont charge is the ones like fidelity but then you cant trade futures.




heywally View Post
I like Fidelity for a 'stodgy' brokerage with an apparently strong financial position. Their commissions aren't terrible - 7.95 and they have a bunch -- 25 -- of commission-free ETF's whose only restriction is that if you sell them within 30 days, you have to wait until the position 'settles' before having the cash available for trading again. So, if you had a scale-in, buy the dip approach using say, the IVV or IWM ETF's, you won't be "commission penalized" by buying very small quantities that you could later sell into strength. I like this. 'dollar cost averaging' with some selectivity.

I'd also consider moving 'some' of your IRA to Interactive Brokers for more speculative trading, if you typically like to take smaller positions in individual equities/ETF's, building up to some total or even if not. You can buy up to 200 shares of any equity there for $1 per trip. Their pre-market trading opens at 4AM EST which is nice. So, the above scale-in approach works extremely well at IB. But the more shares you buy, the less favorable the commissions become, though they have several plans and they can be negotiated with. Plus, they have a very big range of products that you get access to without extra exchange fees. My only concern about IB, and I have no hard 'evidence' to base it on, so take it with a grain of salt, is that because they have such favorable margin rates (not applicable to an IRA of course) and 4:1 24X7 leverage for non-IRA equity and have some really large traders using it, I just wonder what would happen to them in some kind of meltdown situation. Insurance yes, but so what. But really, I have no idea, I am just paranoid after 2008. This is why I said 'some' of your IRA. I've never had any significant problems with IB though, using them for 10 years.

You may also want to consider Thinkorswim/TDameritrade, depending on what type of trading you are doing. I've just moved most of my stuff over there because I like the platform and am comfortable with TD's financial strength. You can also negotiate commissions down if you have a decent size account and/or are a frequent trader.

Lots of options .....


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