Contrary to common belief, investing in managed futures and CTA strategies through an IRA account is actually quite simple. Since most financial institutions will not allow you to invest in futures strategies, the first step is to “roll over” some of the funds in your IRA account into a “self-directed” IRA account, held by a custodian who accepts futures accounts (for a list of custodians we work with contact your Walsh broker). A self-directed IRA account is no different than a regular IRA account; the only difference is that you, the investor, is “directing” the placement of your funds. “Self directed” IRAs allow you to invest in managed futures, while still maintaining tax deferred growth because the assets are contained in an IRA.
Despite how daunting it may sound, rolling over (aka transferring funds) some of your funds from your existing IRA account simply requires the completion of a few forms. Once these forms have been completed, your custodian that will manage your futures investments will take care of the entire roll over process. The neat thing about opening a self directed IRA, is that you get to decide how much of your IRA funds you would like to move from your current financial institution. We recommend starting with an amount you feel comfortable with and leaving the balance with your existing institution. As you get more familiar with managed futures investing, you are free to transfer (or “roll over”) more funds as you please.
Creating and funding a managed futures account in your self-directed IRA is a relatively simple process. Many clients of Walsh Asset Management choose to use their retirement funds to fund a trading account and build tax-sheltered income on the returns.
Below is a list of steps outlining the process of setting up a self-directed IRA so you may begin investing in managed futures investments within your IRA. For additional support, a trust custodian representative will walk you through the steps, review the paperwork to ensure it is in order, and processes the transaction inside your IRA.
1. Establish a IRA trust custodial account by completing an application online or by hand, which you can mail, email, via fax.
Fund your IRA in 3 ways
-IRA to IRA transfer
-401k or other qualified plan via rollover
-Annual contribution
2. Establish a trading account with Walsh Trading via one of our Futures Clearing Merchant(FCM) relationships
-Individual capacity
-The trading account is titled in the name of your IRA
-If you are not trading this account yourself, you must grant a Commodity Trading Advisor (CTA) permission to trade in the account on your behalf
3. Your trust custodian will process your completed trading agreement with your desired Futures Clearing Merchant (FCM) and CTA agreement.
-Your trust custodian will countersign the trading agreement to build this account within your IRA
-A trading account number is usually created in a few business days
4. Funding
-We can now facilitate your funding through online portals once click “approve” for us to do so in the portal
-If the investment amount is over $100k, a manual purchase form is required and completed with a phone call, we will also call to verbally confirm your approval to fund the investment into the trading account
-Funds will usually go out the next business day via wire
For a list of trust custodial firms reach out to your Walsh broker.
Bill Reavis
Walsh Asset Management
312-957-4731
breavis@walshtrading.com
Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.