Forex IRA, Tax Deferred or Tax Free Roth
When you trade the forex market in an IRA, your profits can be tax deferred in a regular IRA, or you can withdraw the profits tax free using a Roth IRA. This applies to USA citizens who have special retirement accounts called Individual Retirements Accounts (IRAs), which allows investments to accumulate tax deferred. It you are not a resident/citizen of the US check your local laws for similar tax deferred retirement accounts.
There are two types of forex IRA accounts, the Traditional IRA allows you to deduct contributions from your income to reduce tax liability and the money grows tax deferred. You pay income tax on the withdrawals upon retirement. Contributions to a Roth IRA are not tax deductible, but when you withdraw the money when you retire the withdrawals are tax free. In order to trade the forex market with IRA money you must open an IRA forex account with a self-directed IRA or self-directed Roth IRA firm or trustee. We have a list of three custodians below. These three are by no means the only custodians available, but will provide a trader with a starting point. You must download the brokers individual brokerage application, fill it in and send it to the self-directed custodian of your choice.
Self directed forex IRA firms need the account application, transfer document if transferring money, or other funding documents, buy direction letter standard, and fee schedule. Make sure you understand the annual fee structure before you open the account. Some custodians have no annual fee, and some custodians offer no annual fees for low balance accounts. Shop around based on your situation.
Setting Up Your Forex IRA Account
The list of self-directed IRA firms we will present includes Midland Trust, Trustec, and Forex.com. You can go to their websites to begin your search for a custodian that allows a forex trading account in an IRA. This list is intended to get you started. You can supplement this list with some web searches. The IRA forex account custodian manages your account, they handle all of the administration, deposits, distributions, etc. They also report information to the account owner and the IRS. In order to open a forex trading account in your IRA, the custodian must be willing to open a forex trading account on your behalf with the broker of your choice. Make sure the custodian will accept forex trading accounts. Also make sure the custodian will accept your forex broker of choice. There are many brokers in the USA that allow forex trading in an IRA, and we give out clients a handy guide for selecting a forex broker for their use.
Forex IRA - Contribution Limits
Most people can contribute up to $6,000 to $7,000 annually to a Regular or Roth account and Regular IRA contributions may be tax deductible, depending on your income. For exact information about your situation check the IRS website for the contribution limits. Since most USA traders trade with 50:1 leverage you would likely only need one year of contributions to fund your forex retirement trading account, possibly two.
Forex Roth IRA
Roth IRA withdrawals are tax free, so if you can build a forex IRA trading account in a self-directed Roth this is an excellent option for anyone young or old because when you withdraw the funds you are not taxed on the withdrawals. If you can fund a Roth IRA with $5,000, then build the account to $100,000, you can withdraw all of the profits tax free.
Forexearlywarning provides forex traders with a profitable trading system that allows them to trade the forex market in an IRA. It is possible to build a tax deferred or tax free Roth IRA by trading the currency market, and the potential is excellent. Forexearlywarning is providing this information to our clients to get them thinking about trading the forex in a retirement account. Please consult with your investment advisor, tax consultant and IRA custodian with any questions about their services or impact on your income tax situation.
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