I also like trading inside an IRA or pension plan, at least until one has built up enough capital inside the plan to give a decent retirement income. There is no tax at all of gains until withdrawals are made. As you say, there is not even any detailed reporting required. It allows one to build up larger balances earlier, and this opens more trading possibilities or better access to managers too for those who have funds managed by CTA's. When/if the amount inside the plan becomes large, then I would start building up money outside the plan. For me, trading is much safer than "investing".
> Which other Administrators have you spoken with besides Millennium Trust? Sterling Trust Equity Trust Entrust Group about three others whose names I don't remember at the moment Tom
> > if you were for instance daytrading index futures, I think that activity "could" > > be construed at a business by the IRS, meaning that any income would be > > taxed, and taxed at very unfavorable rates at that. > > This is a very naive and misplaced wild guess. Once inside your account, you > don't even do any kind of tax reporting. "The Tax Guide for Traders" from Robert Green, CPA (www.greencompany.com) discusses the possibility that overly frequent trading in a retirement vehicle may lead to UBTI treatment by the IRS. Unfortunately the discussion does not give much sense of the likelihood of it occuring. I think Green wants you to pay up for that much advice... Tom
How low you can stay under radar is key there, unless Hussein does as he promised about giving the IRS more money to prosecute investor tax accounts (yes, he specified speculators by name... that's you and me).
Agreed. In discussions elsewhere nobody has been able to provide an example of the IRS ever having pursued this theory that investing/trading in a retirement account could be treated as operating a business. I think it would be a lot more likely to investigate if you were operating a dry cleaners or something inside your plan. Or real estate investing, which some people are doing and getting away with it. However, if you were managing money for other people, or perhaps carrying on a trading business outside the plan as well, and declaring it as a business, then perhaps that might make one slightly more vulnerable.
I am an ex-stock broker and financial advisor with futures trading experience and I am saying this as a "friend"... This is a bad, bad, BAD idea. (and I don't give a crap if it is legal or not!). If you have a 401K OR IRA - trade index funds even leveraged funds like rydex, long short, pick some value stocks - switch in and out of the market AND play a little futures account for fun (and possible profit), depending on your age you should have a mix in your retirement of stocks, cash, bonds etc. NEVER futures contracts!) Follow this or not I have no vested interest but I have seen some ugly stories with retirement funds and futures where money was lost/gone/bye-bye for good! uninitiated in the futures markets, you are liable to piss away your retirement future for GOOD. I assume you have a meaningful 401k (250k-500k). You do not need to trade futures with more than 10-20k. Speculate WISELY(!) with the rest - if you do not know how, HIRE someone!