Index Trading Inside Of Your Retirement Account For Better Yields
If you have ever wanted to trade the index (or anything else for that matter) inside
of your retirement account, you may have ran into a wall of opposition. That's because your broker may not know much about it, and others think it is illegal - but it is not. Here's how to pull it off.
First off, we are NOT referring to trading stocks in your IRA account (which is normally not a problem unless you are labeled as a day trader and you don't have at least $25,000 inside of your account), but trading something other than equities (I prefer index trading over anything else, but that's just me). Let's say you wanted to trade orange juice or some other commodity. This is where you may hit a wall with your broker, or IRA advisor.
The problem is that futures brokers are not generally geared to help folks set up their IRA or other qualified plan. Why should they be? Everyone and their brother has warned you to stay away from these investments right (even though they know nothing about them either)? You don't want your broker overseeing your account anyway.
If you have done your homework, practiced your demo trading to the point where you KNOW you could be making some major dollars trading inside of your retirement fund, then it can be done.
The best way we have found is to set up a truly self-directed IRA. This is where you have a custodian that oversees your account, but does not give you investment advice. There are plenty of these firms around, but you need to be sure of any fees they charge. All Self-Directed IRA custodians charge fees, but some of them are extremely and needlessly high! Keep looking till you find one that will work with you without charging an arm or a leg.
Once you have your IRA account set up, then you simply apply for an account with your favorite futures broker under the Trust name of your IRA account. The paper work is about the same as when you set up your individual account, there is just a YOUR NAME TRUST on the forms instead of your personal name. Also, when you make withdraws from your trading account, they won't go to you, but to your custodian. Then you can have them send you the funds you need.
With these type of accounts (I like ROTH's the best - then the trading income is all tax-free) you don't want to pull the money out until you are going to spend it. In other words, why pull it out of a tax-free account and park it somewhere that it draws interest that you would have to pay taxes on?
Inside of your self-directed IRA you can have several things going on. Stocks, ETF's, trading, real estate, you name it! Just don't pull it out till you need it! Your broker may not even know what you are doing, but you will be trading inside of your Retirement fund.
by: Doug West
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