Do any of the tax-deferred accounts--401K, 403(b), ROTH, 529--allow trading on margin? Or is this only possible in taxable account?
margin trading in tax-deferred account?
Apr 05, 2005
5 Replies
It's definitely not allowed in IRAs since using any part of an IRA as collateral for a loan is a prohibited transaction.
Explicit borrowing may not be allowed, but I think one can purchase a leveraged open-end or closed-end mutual fund or options in an IRA, or even use an IRA account for futures trading. Only sophisticated investors should consider these things.
Not to mention that "debt financed income" within an otherwise exempt account would probably be taxable.
MTW
I think the allowed leveraged mutual funds use options, so maybe you can do options directly as well.
You can write covered calls and purchase puts and calls in an IRA, since those do not involve margin.
Join the Discussion
Have something to add? Share your thoughts — no account required.
Didn't find your answer?
Ask the community — no account required