Self-directed IRA accounts

Discussion in 'Retail Brokers' started by Marx, Dec 12, 2009.

  1. The problem for me is losing use of the funds while they are being converted. I wonder if IB would just move the funds over to my Roth IRA account with them? I doubt it I'm sure there's paperwork involved in the conversion.

    Just FYI I know Equity Trust will work with OEC, I tried that route but it became too big a pain to have IB transfer part of the funds to equity trust.
     
    #11     Dec 13, 2009
  2. Trading Futures on your IRA? Wow! I hope you are really young ;)
     
    #12     Dec 16, 2009
  3. It sounds really risky but that of course depends on leverage. Trading one e-mini S&P 500 future in a $100K account is less risky than putting all $100K into SPY. That said you can best most people are not this conservative with the trading.
     
    #13     Dec 16, 2009
  4. RedSun

    RedSun

    Correct. With futures, you have much more flexibility. You can control your leverage and fit your risk profile. You can do spreads, or build a diversified portfolio with equity, commodity and fixed income products, much safer than holding IBM as your long-term investment.

    All depends on how you manage it.
     
    #14     Dec 18, 2009
  5. Kevsdad

    Kevsdad

    While it is legal to trade futures and do all sorts of stuff inside your IRA, you are probably going to have a tax disaster.

    The reason for the disaster is the tax code says that if you personally guarantee your IRA, it is completely and fully distributed and loses all future tax deferral as well as any asset protection.

    Review your brokerage agreements. 99% of them require you to guarantee your IRA account.

    Thus 99% of your IRAs are fully distributed and you don't even know it.

    This is a real disaster and the IRS, in search of revenue, is starting to go after these blown up IRAs.

    Tim
     
    #15     Dec 21, 2009
  6. Wasn't this in one of those mailings from Traders Accounting trying to drum up business?
     
    #16     Dec 21, 2009
  7. Kevsdad

    Kevsdad

    Yep.

    I asked Jim Crimmins of Traders Accounting to send this out to his people.

    I'm the one who got the black and white confirmation from the govt. that this is reality.

    Figured traders would like to know that they no longer have IRAs, are subject to massive back taxes and penalties, and thus asked Jim to send the info out.

    Its really amazing that a number of brokerage firms, a large number, are ignoring the issue and continue to require language in the agreements that cause the IRAs to blow up.
     
    #17     Dec 21, 2009
  8. Can you provide the details from the gov't? The letter or whatever you got ....like to say what those bozos are going to do now....
     
    #18     Dec 21, 2009
  9. Kevsdad

    Kevsdad

    Bob,

    Here's the link to the official ruling.

    http://www.dol.gov/ebsa/regs/aos/ao2009-03a.html

    To try and translate, it says that if the IRA owner guarantees, gives a pledge of indemnification, grants a lien on personal accounts, the IRA has engaged in a "prohibited transaction".

    Under the tax code, if an IRA engages in a prohibited transaction, the IRA is completely distributed and subject to taxes.

    There's going to be a lot of shocked people out there in a year or two. I know for a fact the IRS is starting a program to audit IRAs.
     
    #19     Dec 21, 2009
  10. Re-reading this, what does this have to do with futures? Most brokers require this for stocks, mutual funds, or whatever. It's of course more likely to blow up an account with futures than with stocks, but not impossible.

    Good luck to the IRS in finding all these accounts .... and I don't see them going after 99% of the population.....without congress pulling their choke collar....
     
    #20     Dec 21, 2009