Trading Retirement Account Long and Short

Discussion in 'Trading' started by ddefina, Sep 24, 2001.

  1. ddefina


    Anybody know a way to take money in an IRA or 401K from work and invest it in a vehicle, such as an Limited Liability Company or Trust, that the IRS would approve of as a legitimate retirement account investment? Then take the LLC or trust and trade both long and short positions, bypassing the retirement plan rules of no margin accounts? Then have the LLC or trust issue a schedule K-1 each year to the trustee of the retirement plan showing the asset value of the investment.

    My 401K is getting killed in this bear market; first because I don't have control of the funds quite yet (administered by company), and second, I can't short stock if I did have access. Is there a creative way to trade this money and still have it qualify as money in a retirement account? :)
  2. Rigel


    I'm not a lawyer, but as I understand it, while your working for a company your IRA is the responsibility of an "administrator" that the company is required by law to hire to manage their employee IRA fund. The administrator my former company hired was Kidder Peabody. Most administrators trend to be "Schwabies" who believe in the value of long term investments unfortunately. The only way I know of to get your hands on your part of the account is to change jobs. When you recieve your "distribution", as much as a year later, you can roll it over into an IRA account at Ameritrade, Datek, Schwab etc.. THEN you can manage it YOURSELF. I quit working for a company awhile ago and did an "IRA rollover" to a Schwab account 14 months ago when I recieved my distribution. Schwab now administers my IRA and I can trade it. I don't know about margin and shorting with that account because I haven't tried it. What I did then was to withdraw a small part of it, pay the 10% penalty, and open an account with a discount broker to be able to short, use margin, and trade with reasonable comissions to see if I could make any money at this game. Been at it 5 months full time now and so far I'm even-Steven.Because of all the rumors running around last summer about the market possibly doing a correction in September I decided to just leave the IRA all in cash. The correction happened, boy did it, and at this time my account is worth about $70,000 more than it would have been if I'd left it in mutual funds, which is where my former employers had it. There may have been a way for me to get my hands on my money while I was still working for the company but they were really tight-lipped about the workings of the retirement plan. Top secret, hush-hush kind of a deal. They didn't like to talk about it. Good luck.
  3. ddefina


    Thanks Rigel for the reply. I should clarify what I'm asking better. I will have control of my IRA soon, but want a way to take the IRA money and invest it in my own "stock" (either own corp, LLC, limited partership) instead of a listed stock, so I can invest it without the margin and shorting restraints present in a normal retirement account. Then my IRA account would show as it's only investment: 1000sh of Mystock, Inc.. Then if I made several million over 10 years time, my 1000sh of Mystock, Inc. would be worth $3,000 a share within my retirement account. Good theory, but wondering if it's feasible legally somehow. Thanks.

    I didn't know it could take so long to get your money after you quit from your company. Wow, I'd be ticked if I had to wait this last year for my money.
  4. dilman57


    to maintain IRA status the money must remain in an IRA qualified would have to find a custodian willing to establish your account and hold the restricted stock.Most firms wont do this.Depending on the amount of money involved you may just utilize a "bear"fund for the short side.The are some up 60-70% this year.
  5. JayS


    I trade my IRA in a futures acct by going through a Trust Company. The Trust holds 30% of the funds which I can use to do the normal buying mutual funds, stocks, & bonds.

    The other 70% is sent to my Futures broker (who they have some kind of contract with). These funds can be traded like any other futures acct, ie: using margin, going long or short, spreads, any kind of futures options trades.

    The entire time my acct holds its IRA tax status.

    You can try contacting a trust and see if they have anything going for equity IRA accts that can short and use margin (I've never heard of any that do :( ). I use

    Some others that do the futures IRA's that you may want to contact about the equity thing you propose are:


    Sterling Trust

    there's a few others I can't remember off the top of my head, sorry.