Career Fantasy

Discussion in 'Professional Trading' started by ShoeshineBoy, Apr 3, 2007.

  1. Okay, I’m going to let you guys in on my career fantasy. The problem is that I don’t know if it’s a fantasty that could one day become a beautiful reality or if it is just a Pipe Dream because of tax code or something else that I’m not taking into account.

    Things have been going pretty well in the Roth IRA of late: I’m making consistent gains. Now let’s suppose I can keep that up for 5 years and end up with, say, a million in that account. Someone let me know if the following is doable with that million:

    1. I pull out about 500,000. If I do that, I’ll have to pay taxes on the 500,000 which will be around 25% plus I’ll have a 10% penalty. That will leave me with about 65% of the original or around $330k.
    2. Leave the original $500k in the IRA and continue to build it up for retirement.
    3. Trade off of the $500k. If I can swing trade even 33%, that’s $165,000/year.

    So what do you think? Has it been done? Will the IRS stop me?

    I know I have to give some money to the IRS, but to me it would be worth it to be able to retire early.
  2. RL8093


    It's possible. I know a guy who had less than $150K in his retirement account. He took it out, paid the penalties/taxes, quit his job and began trading full time. Worked his account to over 7 figures - bought some land on a big lake, had a $2mm custom place built. Sweet.
  3. rockn


    You don't pay any penalty out of a roth
    from withdrawing out your own after tax contributions that you made into it

  4. What happens in year 1 of the new venture if you are down 20%? So you are down 20% plus all withdrawals you need to make to live. What happens if you are down the first 4 months of the year and cannot really make any withdrawals?

    $300K is not enough to live entirely off of given the trading risks.
  5. Isn't there a retirement age, say 59 1/2 or something, that they want you to wait until before you start pulling anything out of it? I thought there was a 10% penalty if you pulled out before that?
  6. Good point and I definitely admit I hadn't thought all the way through that.

    However, the way I trade is pretty steady and non-volatile: I use no margin, long only and a fixed acct %/trade. Furthermore, I use only stocks that are very steady (at least compared to the NASDAQ issues I started with).

    But you're right: I need to ask myself even harder q's than you posed actually and I agree 300k isn't enough. You've inspired me to look - for what it's worth of course - at some of my backtested numbers and come up with some parameters...
  7. Wow! Your friend is definitely "balls to the wall".

    Thx for the inspirational story...
  8. Yeah.. quitting your job to trade 150K left in a retirement account (probably 100K after taxes/penalties), is at minimum a huge gamble.
  9. It's a gamble but.... go big or go home :D
  10. I'm not really sure I should take advice from someone named 'showyouwang'...
    #10     Apr 4, 2007