I was part of a discussion with some investors a few weeks back about how to tap IRA funds and all the rules and regs that go along with it. There are many reasons to want to tap IRA funds or move large amounts of funds into IRAs, i'll leave those to another discussion, but I wanted to bounce off an idea I have to do this.
The basics of an option contract is that it is a zero-sum game. There is a buyer and a seller of each contract. What if your IRA was the buyer and your personal brokerage account was the seller? Seems like an endless amount of possibilities with transferring large amounts of money in/out of an IRA as needed.
For example, a covered call is the synthetic equivalent of a short put. So if you had a covered call position in one account and a long put in the other account, you would synthetically hold opposite ends of the same trade.
I quess a simpler example would be holding TWM shares in one account and IWM shares in the other account. TWM is the inverse ETF of IWM. I just like the idea of options better because at expiration, one side of the trade is worth zero so the other side holds all the value.
We choose this route and kept our payroll down to $36k a year a peice to help cut down on the SS tax, then whatever is left over from the company for profits I just show it on my 1040 as income from corps. Are you saying I can use this IRA money and move it around to do other things with it without paying a penalty on all the tax defferment I have been getting for the past 10 years ?
You absolutely can self-direct pension money. So you have a SIMPLE and your partner has a SIMPLE and Roth. All three of those plans can be self-directed.
There are some rules: You can't buy life insurance and you can't invest in collectibles. You also can't benefit a disqualified person. In this case, you would be "disqualified" as it relates to your pension plan.
So, let's talk about what you could do.
Let's say you have $30K in your SIMPLE and your partner has $30K in her SIMPLE. You could combine those two in an invesment in real estate. Maybe invest in someone else's deal as a limited partner or buy a house to flip or property to hold and rent. You can't get a loan in your name, but your pension can get a loan with 30% down. (So, in this case, you're talking about buying a $200K property with $60K down)
I've got one client who began self-dealing with his Roth account, buying stock in software start-ups and even using the Roth to fund his own software start-up. He now has over $1 million in his Roth....all TAX FREE!
In another thead we talked about the issue of being able to access the money. You can't take a distribution until you're 59 1/2 without a penalty. There are a few exceptions to that.
This is a very brief overview of what's possible. I wrote a book on it - so obviously could go on and on...
I know how everyone so enjoys my ?'s lol so here it goes.
Im intreseted in possibly setting up a ira of some sort to forex trade in. I am on social security disability and I married (not sure about either) I believe one of those 2 things allows me to open an account in my own name. (social security earnings are taxable for me and im a non working spouse of a wage earner not sure if Im thinking of the right retirement account with the non working spouse part.)
So since Im already disabled would I be allowed to make withdraws from the account tax free? or do you have to become disabled after opening the account? or am I not allowed to have one at all?
"brick walls are there for a reason...they let us prove how badly we want things." Randy Pausch
Diane-- which book is this?
And also, it's my understanding that if I took *my* IRA funds and invested them in RE, I cannot have any part of running the property-- I must have a different person/entity do all of the mgt and repairs/improvements (at least that's what all of the self-directed IRA places told us).
We figured out a way to make it work, though. I'll email ya.
Beer & Pancakes 2012-- The EVENT
"Control everything. Own nothing." -John D. Rockefeller
"Don't confuse motion with action" -Ernest Hemingway
You can't do the management, but can do the administration, if you use an IRA LLC. There is a bit of a fine line there - you can administer the LLC, which means you make sure rents are paid, repairs/fix up are done...but you cna't actually go fix the roof yourself.
Maybe I should do a post later on the IRA LLC...
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