Futures and Forex Trading Process in an IRA - Equity Trust

The process of futures and forex can seem hard at first. But, after breaking it down, you begin to see a clearer picture. This article includes understanding what futures and forex are, investment rules and documents, how to book assets, and how to distribute an account.

What are Futures and Forex?

To better understand the process, you need to know what futures and forex are. Below are terms that will better help you understand this concept.

• Futures contracts are standardized contracts for the purchase and sale of financial instruments or physical commodities for future delivery on a regulated commodity futures exchange. A commodity is a good such as wheat, gold, beef, corn, or oil. They fall into four categories, agricultural, livestock and meat, energy, and metal.
• The forex market, better known as the foreign exchange market, consists of banks, investment management firms, and retail forex brokers and investors.
• A forward contract is a private, cash market agreement between a buyer and seller for the future delivery of a commodity at an agreed-upon price. These are not standardized and non-transferrable.
• The Spot market is where cash transactions for the commodity occur.
• Futures trading is an agreement between a buyer and seller on a certain price for commodity-type items.

Futures and Forex Investment Rules:

There are a few important rules to follow when dealing with futures and forex. First, the trading account title is in the name of the IRA custodian or administrator. Second, you need to understand the ownership percentage. These investments will always be 100% owned by the IRA and never shared by multiple parties or IRAs.

Next, you must know that there is never any personal guarantee when investing with a futures or forex account. Lastly, all funds must flow through the IRA. Funds sent by the IRA would include additional funds and withdrawals.

Required Documents for Purchasing Futures and Forex:

To begin trading with futures and forex, you must first open an account at Equity Trust. Next, you can select which trading company you would like to work with and fill out their application to open an account. Once processed, the brokerage will send the application over to us. We will then reach out to you to confirm the amount to send over to your trading account.

Trading Account Transaction Fees:

You will owe certain fees throughout the futures and forex process here at Equity Trust. Those fees are below.

Purchases

• $50 transaction fee (no additional wire fee charged)
• $325 per asset fee at the time of initial purchase (not for additional fundings)

Withdrawals

• $25 transaction fee for withdrawals made through the client portal (no incoming wire fee)
• $50 transaction fee for manual/paper form processing of withdrawal request (no incoming wire fee)

Withdrawing Trading Account Funds:

When the time comes to withdraw funds from your futures or forex account, there are a couple of ways to go. One way is to liquidate the account. You can do this by submitting a “Trading Account Withdrawal” request through the client portal. Or you can complete the Trading Account Withdrawal Form (TAW). The TAW is on our website or can be emailed to you.

Once we receive this request, we will send an email to the futures commission merchant (FCM) requesting a full or partial liquidation. The FCM will then send the funds back to the IRA. Secondly, you could perform a distribution from the account. To complete this, you begin by completing the “Equity Trust Distribution Form” from the client portal.

As the client, you must provide a current account statement from the FCM. You must also provide new titling on the trading account to personal ownership. The IRA must pay all fees related to the appraisal or attorney.

If you have any questions regarding trading futures or forex in an IRA or need help getting started, please contact us at (239) 333-1032, or visit our website and chat with one of our professionals.