# SEP IRA and traditional IRA



## Jimmy44 (Jan 12, 2020)

I withdrew money from my IRA and used it to trade on margin.
I did very well. So well that I need to Max out my IRA contributions in order to get deductions.
I paid back rolled over the money I withdrew. 
I made my maximum contribution for 2020 in my traditional IRA.
My margin interest is also deductable.
My question is can I set up a SEP IRA in addition to my traditional IRA to increase my retirement contribution and deduction for 2020.
I use TD Ameritrade for both my IRA and my regular margin account.
Any advice to increase deductions would be helpful.


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## Johnny Mnemonic (Sep 24, 2019)

Jimmy44 said:


> I withdrew money from my IRA and used it to trade on margin.


Have you considered playing Russian Roulette for money instead?


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## Uber's Guber (Oct 22, 2017)

Jimmy44 said:


> Any advice to increase deductions would be helpful.


There are many reputable sources you can learn from, even better is utilizing the services of a qualified financial consultant who can personalize a plan for you.
You do realize that you are currently attempting to solicit important financial advice from members of a forum that caters to Uber/Lyft drivers, the bulk of which can't even afford a pot to piss in?


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## Jimmy44 (Jan 12, 2020)

Johnny Mnemonic said:


> Have you considered playing Russian Roulette for money instead?
> 
> View attachment 577887


Do some research on Warren Buffett



Uber's Guber said:


> There are many reputable sources you can learn from, even better is utilizing the services of a qualified financial consultant who can personalize a plan for you.
> You do realize that you are currently attempting to solicit important financial advice from members of a forum that caters to Uber/Lyft drivers, the bulk of which can't even afford a pot to piss in?


There are people on this forum that do have expertise in this area.


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## FLKeys (Dec 27, 2018)

Did you make a profit in your self employed ventures? 

If I remember correctly you can only contribute up to around 25% of your net earnings. If as an Uber driver you did not make a profit than you can't send money to a SEP IRA.


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## Jimmy44 (Jan 12, 2020)

FLKeys said:


> Did you make a profit in your self employed ventures?
> 
> If I remember correctly you can only contribute up to around 25% of your net earnings. If as an Uber driver you did not make a profit than you can't send money to a SEP IRA.


This year I only worked 3 months for both Uber and lyft.
This was when Uber was paying nothing and just about every trip was a loss when you used 56 cents a mile expense.
So no this year was my first year out of 5 I had a net loss.
I do think I would meet the IRS definition of a day trader.
My profit from day trading would be considered a business profit and or business income I think.
I believe $10 thousand dollars of UI is deductable.
I have already contributed 6000 dollars to my traditional IRA.
I rolled over 1/3 of the amount I withdrew as the cares act gives you 3 years to put that money back.
So if I could open up a SEP IRA and contribute 25% in addition to 6000 in my traditional I would be good.


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## Johnny Mnemonic (Sep 24, 2019)

Jimmy44 said:


> Do some research on Warren Buffett


I suspect I'm more familiar with Warren Buffett than you are. So my suggestion is that you take your own advice and do a little more research.

https://www.investopedia.com/news/buffett-warns-avoid-borrowing-money-buy-stocks/


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## Jimmy44 (Jan 12, 2020)

Johnny Mnemonic said:


> I suspect I'm more familiar with Warren Buffett than you are. So my suggestion is that you take your own advice and do a little more research.
> 
> https://www.investopedia.com/news/buffett-warns-avoid-borrowing-money-buy-stocks/


I love reading about Buffett and listening to his interviews.
Most of his wealth was built after his 65th birthday. I think he is 93 now and his mind and investing instincts are as sharp as ever.
He has a business partner Charlie who makes a lot of the decisions and suggestions.
He is a buy and hold guy which I am not.
My biggest take from him was not to invest in any company you do not understand.
Coca Cola has been a core holding of his since he started Berkshire and he is also on it's board of directors.
I have always had Coca Cola in my portfolio.
That article about margin is very interesting.
As a day trader I very rarely end the day with securities on margin.
I have never gone over my margin limit where I had to sell securities to cover a call.
I do not ever use my day trading amount ever.
I also stay diversified enough so that one stock correcting is going to kill me.
I listen to Jim Cramer and other analyst's but ultimately I make my own decisions.
The article was great thanks for sending it.


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## SHalester (Aug 25, 2019)

Jimmy44 said:


> My profit from day trading would be considered a business profit and or business income I think.


nope, it's investment income via 1099-i and -div. And if you held for less than 360 days, brace yourself for bite taxes take.


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## pengduck (Sep 26, 2014)

Jimmy44 said:


> I withdrew money from my IRA and used it to trade on margin.
> I did very well. So well that I need to Max out my IRA contributions in order to get deductions.
> I paid back rolled over the money I withdrew.
> I made my maximum contribution for 2020 in my traditional IRA.
> ...


Look in to setting up a SERA. Not sure of all the details but I think the contribution is double that of a traditional IRA.


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## Jimmy44 (Jan 12, 2020)

V


pengduck said:


> Look in to setting up a SERA. Not sure of all the details but I think the contribution is double that of a traditional IRA.


Thanks I will look into that.
I think I may be ineligible for even contributing to a traditional IRA.
My Uber/Lyft business showed a loss for 2020.
I think if your business shows a loss you cannot contribute to any IRA.
I do not know if a Roth IRA would be helpful to me.
Apparently earnings from stocks is not considered business income.
So I may be royally screwed as I may be penalized for not having taxes removed during the year.
Thanks for the information on the Sera thanks again.



pengduck said:


> Look in to setting up a SERA. Not sure of all the details but I think the contribution is double that of a traditional IRA.


What does SERA stand for.
I googled it and do not get anything for SERA.


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## UberTaxPro (Oct 3, 2014)

Jimmy44 said:


> I withdrew money from my IRA and used it to trade on margin.
> I did very well. So well that I need to Max out my IRA contributions in order to get deductions.
> I paid back rolled over the money I withdrew.
> I made my maximum contribution for 2020 in my traditional IRA.
> ...


Unless you made the election to be a "mark to mark" trader you're not eligible for any IRA or SEP contributions. Hopefully you had enough ordinary income (not just capital gains) to meet the income requirement for your maximum IRA contribution. If not you'll need to fix that. Capital gains do not qualify as income for IRA or SEP contributions.


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## Jimmy44 (Jan 12, 2020)

UberTaxPro said:


> Unless you made the election to be a "mark to mark" trader you're not eligible for any IRA or SEP contributions. Hopefully you had enough ordinary income (not just capital gains) to meet the income requirement for your maximum IRA contribution. If not you'll need to fix that. Capital gains do not qualify as income for IRA or SEP contributions.


I understand but just don't agree with how they treat capital gains.
I will check out criteria for Mark to mark trading for 2021.
Thanks for the information.


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## UberTaxPro (Oct 3, 2014)

Well the other side of the coin is with capital gains you don't have to pay self employment taxes like you do with with other earned income. FYI - to make the mark to market declaration you have to do it before the filing deadline of the previous year. Which means if your going to to this for 2021 it has to be done by 5/17/21. Let me know if you ever need some help, trading is one of my tax specialties.


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