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Calling All IRA Accounts

IRA Accounts

Over the years we’ve had clients trade forex and futures in IRA accounts at various IRA custodians.  Some of these firms have been bought out or merged, while others are still the same old dinosaur that has been around forever.

There are many different IRA custodians out there, but NOT many who deal with a variety of alternative investing for the self-directed IRA, such as:

  • Trading futures, forex, and options
  • Purchasing real estate
  • Private equity
  • Bond offerings (non-public)
  • Checkbook IRA (this is where your IRA owns shares in an LLC which does all of its own investing autonomously)

While there aren’t a ton of these types of custodians, there are some out there and we are determined to identify those that do it best.  If you would like to be a part of our “quest for the best,” please email your broker at Foremost.  We would love to hear some feedback from you about what you do and don’t like about your current custodian.  With your help, we might be able to determine if a transfer would benefit many of our clients where they can receive better service at better rates.

Or contact our admin!

We will compile what we hear and know and share the results with you in a future post.

The Foremost Trading Team

Have questions? Call or email us!

(888)818-0880
info@foremosttrading.com

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Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/

Potential Tax Advantage With Futures – Blended Tax Rates and Capital Gains

Tax Advantages with Futures

Trading futures offers many advantages such as leverage, 24-hour trading opportunities, favorable 60/40 split on your tax liability, ease of tax filing, carry back losses, and more.

Futures and options traders have been utilizing the 60/40 method for more than 30 years. Under this tax rule, 60 cents of each dollar earned by a futures or options trader/investor is taxed at the capital gains rate while the remaining 40 cents is taxable at the ordinary rate, resulting in a blended tax rate.

In 2012, gains on securities such as stocks are taxed at either the short-term capital gains rate of up to 35% or the long-term capital gains rate of 15%. But the taxation of commodities is much different than that of securities.

Short-Term Capital Gains with Stocks

Typically, if you sell an asset you have held for one year or less, any profit you make is considered a short-term capital gain. For 2012, ordinary tax rates ranged from 10 percent to 35 percent, depending on your total taxable income.

Long-Term Capital Gains with Stocks

If you hold your assets longer than a year, you can benefit from a reduced tax rate on your profits. As of 2012, the long-term capital gains tax rate was 15 percent for most taxpayers. If your ordinary tax rate is already less than 15 percent, you could qualify for a zero percent long-term capital gains rate. For high-income taxpayers, the capital gains rate could save as much as 20 percent off the ordinary income rate.

Potential Tax Advantage with Futures

There is no accounting for each and every buy/sell throughout the year.  It is important to understand that the time you hold the futures contract is not relevant to the preferential treatment of the 60/40 split. The 60/40 split is automatic to any regulated futures trade. Furthermore, the rate at which your gains are taxed is 60% long-term and 40% short-term capital gains no matter how long you actually held your trades.  For example, even if you made $1,000 net profit at the end of the year on a single trade that lasted for seconds, $600 of that would be taxed at the lower long-term capital gains rate!

Mark-To-Market (MTM)

The 1099 received for each futures trading account, will report a net gain or loss of all trading in the specific account for that calendar year.  Any open positions at year-end, are marked-to-market (MTM) and included in the net gain/loss.

If you have not traded futures yet, you may want to consider it. You may find that once you trade futures, they may become your favorite trading vehicle.  Please consult your financial advisor to see if this is an option for you.

Each taxpayer’s situation is unique so please consult your tax advisor to see whether this can benefit you.

Pat Kolodziej, CPA, MST

Managing Member
PK Tax Services, L.L.C.
87 S. McLean Boulevard, Suite A
South Elgin, IL  60177
phone  (224) 227-6061
cell (847) 858-5074
fax  (224) 227-6059
patk@pktaxservices.com
pktaxservices.com

 

Circular 230 Notice:

In accordance with the requirements imposed on professionals who practice before the Internal Revenue Service, we advise you that any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/

Discipline Isn’t Willpower

You’ve heard it, and you know it but it still can taste like a bitter pill to the impatient, emotional or the unprepared. Discipline is designing the right environment to achieve the goals you have so that when events occur you’re ready with your strategy. When investing sometimes this means having a plan for adding funds when it’s a steal and other times it means being ready to hold-fast through down-turns and market cycles.

In the Futures Trading and Investing business, discipline can translate in the following ways:

For the Traders:  Knowing when to hold ‘em, when to fold them.  Knowing when to use stops, protect with options, take profits, double up, or bail.

For Foremost Brokers:  It means carefully researching a CTA, its track record, and trading strategies they employ.  This review includes examining the various markets, program trades, their trading style (long term vs. short term vs. day trading) their impact on a portfolio, and use of options (to hedge, spread, or outright sell).  These are just a few of the ways we look at CTAs. Foremost brokers are well disciplined.

For the Investor:  It means reviewing a program of interest with your broker, and having the mental frame of mind to know when to stick with a program or consider advice on when to exit or make a change.  This sounds easy, but it’s not! With this information and frame of mind, investors can select CTAs confidently.

It takes discipline to stick with a decision when an account has a downturn and changing the game plan prematurely can often be regretful.  Track records are indeed made of losses as well as profits, and managing risk is the key. As a reminder, detailed review of trading advisors and managers doesn’t eliminate risks in the markets. Increased opportunity also comes with increased risk. Only those emotionally and financially prepared should consider investing.

And yes, cod liver oil still tastes like cod liver oil.

The Foremost Trading Team

Have questions? Call or email us!

(888)818-0880
info@foremosttrading.com

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Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/

Liquidity at a Price – Bankruptcy Claim Buyers

With a large corporate bankruptcy, claim buyers are ever-present. Such is the case with the PFG Fraud case. Offers are from professional claim buyers looking to buy claims at a discount to what the final claim value will be.

Claim buyers learn of your names and contact information by viewing court records. The debtor (PFG) must file schedules of assets and liabilities. Creditors holding secured claims are listed on Bankruptcy court documents Schedule D and those with unsecured claims are listed on the Schedule F. Claim buyers typically contact those with undisputed claims.

Those interested in selling their claim should get the facts from the claim buyers before making any decisions. While liquidity is always attractive, in this case it does come with a price. Some of the key questions to ask and then consider include: price, processing or management fees, claim defense costs, etc. As always, remember to read the fine print and then read it again.

Selling your claim does contain risk and risk of loss. Foremost Trading LLC is not a legal expert and cannot offer legal advice. We suggest you speak with a bankruptcy attorney for specific advice on how to protect your rights if you sell and if you should consider a sale at all.

Foremost Trading has heard of the following claim buyers but this is in no way a complete list of claim buyers:

  • Prime Shares
  • CapRok Capital
  • Hain Capital Group
  • Southpaw Asset Management LP
  • ASM
  • CRT Special Investments (CRT Capital Group, LLC)

Foremost Trading, LLC makes no representation or endorsements regarding these persons, companies, or offers. You will be solely responsible for determining if this is appropriate for you or your account.

The Foremost Trading Team

Have questions? Call or email us!

(888)818-0880
info@foremosttrading.com

Follow us on Facebook!

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Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/

The Good, Bad and the Ugly, and not necessarily in that order…

  • Gold saw its worst retreat since 1980 this week (April 15-19), with selling so strong that standard deviation measurements that are hardly ever heard were being tossed around like buoys in choppy waters. U.S. stock index futures fell on Wednesday, indicating the S&P 500 will retreat from its second-best daily performance of the year as commodities fell.
  •  U.S. stocks posted their worst day since Nov. 7 on Monday as big declines in the price of gold, oil and other commodities fed a broad selloff in equities, with weakness accelerating late in the session.
  • Fatal explosions near the finish line of the Boston Marathon shook our national confidence.
  • New max drawdowns were set by Bluenose BI and White River Group DIV – options traders.
  • We’re in new territory – again. We wanted to let you know that we’ll be in touch with the managers of many of our CTAs to discuss risk management and what went wrong and right with this week’s events. Most importantly, we wanted to reach out to you, our client with our thoughts about moving forward.
  • On the positive side of things – this would be the GOOD part, the CTA managers we expect to thrive during a volatility spike have done their job as evidenced by the top performing programs month to date.

If you have not already, this would be an excellent time to reach out to your broker and connect on the week’s events and your plans for moving forward.

The Foremost Trading Team

Have questions? Call or email us!

(888)818-0880
info@foremosttrading.com

Follow us on Facebook!

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Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/

Time Sensitive Information: Losses in Roth IRAs and Taxes

The following tax notice was shared with us: Ponzi Losses and IRAs.

It is a response letter from Chief John P. Moriarty at the Department of the Treasury to the Honorable Orrin G. Hatch on the topic of tax treatment between the losses direct and indirect investors sustained from the fraud Mr. Bernard L. Madoff perpetrated.

The letter may be significant as it does discuss lost funds in personal savings, a charitable remainder trust, and Individual Retirement Accounts (IRAs).

While Foremost Trading is not a tax advisor and cannot offer tax advice, you should consult your tax advisor about this topic and may want to share this letter.

The Foremost Trading Team

Have questions? Call or email us!

(888)818-0880
info@foremosttrading.com

Follow us on Facebook!

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Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/