Using a 401K/retirement to fund a forex account

Just wondering if anyone knows offhand if you can pull money out of a 401K retirement account to put into forex without having to pay the penalty/taxes as it seems to be another investment route. So that only later when withdrawing funds would be the time you'd pay taxes on that money and not on the base funds left in the account. True, false or just a bit more complicated than that?

many thanks ...

Yes, you can trade a 401K in the Forex market. By law the money has to be introduced by a trust company so check with your broker first. Some brokers also require you to accept reduced leverage (higher margin) when trading retirement funds.

Thats an awesome sum to trade with, minimum risk and still good profit!!

Good Luck!

LOL!

401k is an american name foir a retirement account.

Thank you Phil.

And re: the rest of the thead ... I wish I had $401,000 in my 401K to invest in forex!

oppps Yeh 401,000 tooo right!

you're a brave guy to use 401k for forex trading.

Some brokers Like Interactive Brokers allow IRA account by direct rollover

Not a guy and not that brave. This is not a huge sum of money that I would be counting on to take care of me in my old age. I'm just looking at some options and wouldn't recommend anyone risk a comfy retirement to speculate in a high risk market such as forex.

I don't think i would, but i might Learn the Market for say 4 months, trying a few things out on a demo...start to get used to how i like to trade and reopen the demo account, once i'd got 3 months good consistent profits, i'd open a small account $250 1:1 leverage and go from there, if you loose $250, then big deal, if not, then start putting more in

Alternatively, get

a) managed account

b) Look into a programme called freedoom rocks, it has high reviews

c) look into investment funds, some pay out quite well at 50% + annually

Freedom Rocks is a total scam. Those little pyramid scheming rodents spam this board from time to time and are quickly sent back to the underground borough from which those little beady-eyed creatures originated.

This setup is called a self directed IRA, jst do a google on it.
It is mostly used to buy real estate from your IRA funds, but can be used for just about anything. These are setup by certain custodial firms and usually involve annual fees in $500-1500 range.

I am setting up some IRA accounts through Millennium Trust (a popular trust company for forex investing) for self trading and managed forex accounts right now.

I use my 401k but only with principle protected managed accounts since I don't want to gamble with my retirement. Their a are a few money managers that offer legitimate principle protection. pm for details

Here is another possible alternative. Some 401(k) providers will allow you to take a loan out against your funds - for instance my employer allows up to 50% of the balance of the 401(k) to be loaned out (up to certain limitations).

Here's the benefit: your retirement funds stay invested as long as you remain employed and contributing to the plan. Otherwise, the IRS will look at the remaining loan balance as an early distribution.

Here's the negative: you have to pay the loan back with interest (usually pretty attractive rate for essentially a personal loan). But remember, you're really paying yourself the interest.

So, here's what you may be able to do. First, check with your employer or plan provider and determine if you can take out a loan and what amount you can borrow against your 401(k). When you receive the funds - they're yours! You can go to Vegas with the money for all they care. The payments will be deducted from each paycheck until the balance of the loan (plus interest) is paid back. Presently, however, you can toss that 401(k) loan straight into a shiny new trading account and be on your way to raking in the benjamins.

There is a downside to using your 401K for trading. You cannot take any funds from your account until your 59 1/2 years of age or you will be paying taxes on it.

Good Luck

I wouldn't say it's such a big risk. It just depends on how you treat your trading. If you are trading off of 4hr, daily and weekly tfs with low risk say 1-2% per trade on non correlated pairs then I would say the risk is no worse than equities. I would also say that in a typical 401k you are looking at funds that are long on stocks just trying to beat the market. That is too say that in a down year, your 401k will still be down but it will be down less. The forex market allows for shorts in a much easier way. True that you are not going to be getting crazy returns that people are looking for in forex (I am not sure I believe all of them) but you should be able to get 50% return per year with a very conservative strategy which is much better than you will ever get on a standard retirement account. I would be looking at James16. This kind of trading is suitable for retirement accounts and you should still get excellent returns.

If your gonna roll a portion of your 401k into a self directed IRA, I would consider only rolling over a portion of what your company has contributed. This way if you lose its not a total slap in the face .

Last year I had a contribution go in at the peak of QE2 and I knew it would be a while before my mutual funds would recoup the losses after the expense ratios.

Just be sure you can make enough to cover the annual fees w/ the self directed IRA if you plan on rolling it out.

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