(OT) Tax Deferred Investments ???

I'm looking for a tax deferred investment account for investing in common stocks for future retirement needs.

I can't do any type of IRA as I'm disabled and have no "earned" income so I get penalized for being disabled.

For you youngseters, man don't miss out on the Roth IRA tax benefits before you quit working. What a smoking good tax deal for the working stiff.

The other only tax deferred investment I can find is IRS section 1031 for realestate, cars, etc; but I don't want to invest into realestate at this time.

Suggestions?

T_Bone

• TIAA CREF

I would agree if the rules don't change. But then social security was supposed to be "tax free" since you already paid taxes on it too. In 15-20 years you'll be hearing about "only the rich" people could afford a ROTH and its only fair that they pay taxes on it.

Ya, you brought up a good point as there supposed to make some changes in 2010 to the IRA system. Just hope they make it better and don't take away any advantage we have now.

T_Bone

You would be suprised at just how much knowledge is reading this forum. There's a bunch of very smart people here.

I also seen that IRA pit fall on the 70.5. Boy that could hurt.

I think it's a shame that they don't let just anyone invest in a Roth. I too missed out on that deal.

T_Bone

Not counting elaborate schemes that involve purposely confusing successive layers of ownership, "foreign" owned straw companies, etc.---things that you wouldn't touch with a ten foot pole---I'm not aware that what you're looking for exists.

A 1031 Exchange is a way of exchanging one investment for another without incurring a taxable event. There is no 1031 investment in the sense that you are talking about.

One way to deal with the problem of being closed out of Roth IRA investments because of not having earned income might (heavy stress on "might") be to form a separate business entity (LLC, C or S corp., etc.) consisting of income generating property, which you and your wife are paid salaries to manage. The fact that this might sound dubious is of no consequence. It's my experience with the IRS and the Tax Code that things are generally either legal or they're not. Financial procedures which are legal, and have no social, moral, or environmental downside, are worthy of investigation and serious consideration.

All the best, Stan

Good to see you post again.

Take a closer look at section 1031. There using this to tax defer commerical realestate investment with the IRS blessings.

Ahh but with a C or such your back into paying SET! I can't figure out how I can come ahead with paying the SET for such a small input to a IRA.

Am I missing something?

T_Bone

When I first became aware of the Sec. 1031 exchange about 20 years ago, its rules seemed quite rigid. For instance, what could be exchanged for what was narrowly defined, and the classes were limited. Over the years, the definition of what constitutes 1031 exchangeable property seems to have broadened considerably, and the actual mechanism whereby the exchange takes place seems more flexible, too. The exchange of investment real estate for like kind property was what I thought Sec. 1031 exchanges were about, when I first learned of it. Nevertheless, I would be very surprised to learn that the rules concerning Sec. 1031 exchanges have relaxed to the extent that there is now a tax deferral available when the exchange involves money for investment property, and nothing else.

On the matter of employee taxes or SE tax on wages paid to oneself through one's own corporation, I think you're probably right. The upfront costs of making the money available for Roth IRA investment would be unlikely to be recovered in the current tepid investment climate, and all the more so lacking an investment timeline of twenty years or more.

All the best, Stan

I worked 35 years at Procter & Gamble .....the retirement plan was ....the Co. put stock away for you, based on your income each year.....

As you know stock goes up and down....over all P&G stalk has always gone up..... long term investment, will do very well for you....

1031 is simply an exchange, allows you to sell income producing property and defer the gain. But you'd have already paid tax on your purchase money. Good explanation at the link below.

From what I've read about growth in your area, you might rethink land purchase. PBS had a long documentary on Phoenix growth last night. Wow. Just make sure you sell before they run out of Colorado River water.

I gather you're looking for a stock market investment that defers all earnings? You'd be buying with post-tax money anyway. Actually, it looks like there are lots of stocks that won't have any earnings to tax, but that's not quite what you had in mind. VBG

You're right about Roths, so long as there is growth. Better than deferred, they're tax-free gain. Ours haven't been so hot lately. Nice to hear you have so much taxable income in your disability that you need tax deferment. Call your broker. Annuities worked that way, but I'm behind the times.

I've done far better with real estate than stocks.

• 1031 Exchange

Well they found away to use section 1031 for investment trading realestate, cars, etc; tax deferred until you call it quits and sell out for good.

Huge drawback is the IRS "demands" you use a investment realestate, car, etc; "broker" to complete the buy's and sell's for you. Your not alowed to complete the buy/sell on your own. Now this is stictly talking for tax deferred investment trading of property.

Not like when you sell your home or such. Same section 1031 but different rules to follow for investment trading. You might want to read up on this section as "you" may like it.

I didn't make my self clear on what I'm wanting to do. I need to find a tax deferred account to park my money in so I can buy/sell stocks just like a IRA account does.

Hey just because one is disabled doesn't mean they don't have to plan for "future" retirement needs...LOL

T_Bone

That link explained the 1031 process quite well. Certainly in my future. Maybe sooner than later if we get a slight shift in county gov't here and they eliminate farm taxation. Would tax me out of here in a hurry. I'd be looking at major gains as the second property over has averaged $706,000 for building lots and is selling briskly.

1031 has nothing to do with your personal residence, only "PROPERTY THAT IS HELD FOR PRODUCTIVE USE IN A TRADE OR BUSINESS, OR, PROPERTY THAT IS HELD FOR INVESTMENT". It's particularly useful for anyone who has made extensive use of depreciation.

I understood what you were trying to do, defer yearly tax on gains. Simple arithmetic will show what nets you the most however. Might be municipal bonds, might be better to pay the tax and do your trading if that's your inclination. You could make a killing in futures and comfortably afford the tax liability- IF you do it right. Not my kind of gambling, but it works for some.

Any fees are just part of the cost of doing business. You want to minimize them.

You already know that nothing counts until after-tax. I'm a little surprised that you're so concerned with your current tax situation. But it sure beats having nothing to tax.

Big red flag on your website that you posted, "TAX FREE", but it's not tax free, only tax deferred. Unless I'm missing something?

Go to the IRS website and read section 1031 rules and Pub544. It's not as simple as the realestate people want you to believe. You'll also find it's more than just for realestate transactions.

Ohh I'm looking at muni's. I just haven't looked that far into them, yet that is.

T_Bone

Tax free was for the individual 1031 transaction. It is. Tax free forever requires you die to avoid eventual capital gain. Which can be a good plan, depending on your circumstances.

1031s got immensely simpler several years ago. If you think there's a catch, you're wrong. Look again. It's all spelled out. And a great program. I've used it, likely will again.

You specifically asked for tax deferred investments, look at your thread title. 1031s do exactly that.

Now you want a completely tax free gain investment? No problem, municipal bonds or the unavailable Roths.

Neither are a simple solution. Even Roths aren't always better than traditional IRAs. Look at your return, after tax. It's simple arithmetic to choose the best plan for you.

Very uncomplicated.

See, I thank you for sticking with me and making me see the light...lol I just wasn't thinking in that direction. That could be very useful in my future plans.

My original goal was to make sure I wasn't over looking all my options for 20yrs down the road. It would be terrible to get to the end of 20yrs and say...oops

I bought a copy of turbo tax this year and was doing what "if". Although the program has a few glitchs, it still made it easy to give me a ball park idea of my goals.

Once I get a closer look at what I need to do, then I'll go see a professional and confirm my plans and maybe get a few more ideas to consider.

T_Bone