Managed Futures 401K Tax Shelters

Managed Futures 401K Tax Shelters

401K Tax Shelters

A Self Directed 401(k) is a is a US Government regulated Tax Deferral account from which you can invest in a Managed Futures products and defer taxation on capital gains.  This is another way to allow the profit gained by investing in managed futures to compound.  Using up Self Directed IRA room to compound gained equity and avoid paying out tax meets the investor’s goals of growing total funds.

The below graph illustrates the difference tax-deferred compounding can make over the long-term growth of a tax-deferred savings vehicle. This simple example assumes $100 invested biweekly, a 5% interest rate, and a 28% federal tax rate. Distributions prior to age 59½ may be subject to a 10% tax penalty and other restrictions. The tax-deferred growth amounts show the total value of a tax-deferred investment before deduction of any applicable federal, state, or local income taxes upon distribution, and before deduction of any contract charges.

Managed-Futures-Tax-Deferral-Simple-Example

 

Restrictions

There are certain types of transactions that you cannot perform through a 401(k).

  • Self Dealing.  The IRS prohibits “self-dealing,” investments in which you or family members of lineal descent have prior ownership. This would apply to Managed Futures if your relative was one of our recommended Account Managers.  The IRS defines a prohibited transaction as follows:   “Generally a prohibited transaction is any improper use of your IRA account or annuity by you, your beneficiary or any disqualified person. Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of lineal descendant).”–Source IRS Publication 590
  • Arms Length.  Any Investment that is made within a self directed IRA must be made at arms length.  Arms length is most commonly defined as a willing seller and willing buyer coming together with no undue influence from outside sources.

Can Self Directed IRA’s hold multiple investments?

Yes, you can hold multiple investments within the Self Directed IRA tax shelter.  Since is it’s a tax protection around your portfolio, the only restrictions have already been referenced.

 

Setting up a Self Directed IRA

Setting up a self directed 401(k) is available through one of our associated trust companies.

  • Equity Trust Company
  • Millennium Trust Company

For assistance with setting up your self-directed IRA, contact us for assistance in setting up your account.

The end goal of setting up a self directed 401(k) is to obtain the benefits of deferring the payment of all taxes until retirement.  Your Managed Futures products within your portfolio will receive the benefits of compounding which will greatly improve your overall returns.