At the end of the year, if I incorporate a trading account I have, can I take my profits, or part of them and put them in an IRA of some sort? (Assume I have trader status and have no other job.)
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Trading profits into a tax-deferred account
Nov 23, 2006
3 Replies
Any profits you have from schedule c stemming from the first part of the year will qualify for contribution to an IRA, within the other parameters of deductibility of course. However once incorporated, only a salary paid you (with concomitant FICA and FUTA taxes plus maybe some state unemployment taxes) will qualify you for IRA contributions. Not a good idea maybe.
ChEAr$, Harlan Lunsford, EA n LA
No, not this year unless you have already elected trader status for 2006 before April 15, 2006. I suggest you review the information available at
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and then consult a local taxprofessional who specializes in this area.
You will need earned income to make contributions to a retirement plan. Trading profits are not considered earned income whether you have trader status or not. You may be able to transfer some of your profits to earned income if you operate through a trading entity, but incorporation (especially a C Corp) may not be the best route. Deborah King, CPA Lenoir NC
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