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Comment by idiotsecant | Hacker News Reader

This is the killer, indeed. Checkbook IRAs are amazing retirement tools if you're interested in using some of your retirement money in high-risk, high-reward investments. My retirement fund benefited enormously from the Q3 2020 crypto market gains, which would not have been possible without my LLC. It's hard to see this as anything other than removing all the peasants from the market so that the big dogs can have it to themselves.

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> removing all the peasants from the market so that the big dogs can have it to themselves.

Bingo! Wall St wants a monopoly on ALL your retirement funds. Your typical employer 401k plan offers only mutual funds run by Wall St. No investing in alternate assets such as real estate or crypto. The big boys get their cut AND make sure you are not crowding the field in lucrative investments.

> My retirement fund benefited enormously from the Q3 2020 crypto market gains, which would not have been possible without my LLC.

We probably shouldn't encourage the general public to gamble their retirement funds in a casino. I understand many believe this is an "asset class", but there is ample evidence crypto has no place in someone's retirement asset mix. Such investment in a taxable account is reasonable compromise.

while your heart is in right place, Govt should not be allowed to single out a particular asset class from retirement. they should rather be in business to regulate and minimize fraud in that class. if crypto is out the so should gold etfs be.

I like how we are all pretending that mutual and index funds are also not a casino.

They have cash flows and intrinsic value. Crypto does not.

Oh sure, all those tech stocks that are based on PE ratios and real earnings and definitely not wild, sweaty speculation.

Maybe you should just let people do what they want with their own money.

>We probably shouldn't encourage the general public to gamble their retirement funds in a casino.

No? Should we prohibit them from investing in mutual funds since bonds are so much safer? Or maybe mutual funds are OK but individual stocks should be illegal? Or maybe just certain, whitelisted stocks above a certain market cap that the 'professionals' decide are too big to fail?

Or maybe we should let individuals decide the correct mix of yield and risk that suits their age and risk tolerance?

I don't think too many "peasants" have LLCs so they can use their IRAs to invest in crypto.

I was thirty when I started making "real" retirement money. I suspect peasant is an exaggeration, but there's a good chunk of highly paid folks that are playing catch up to retirement or have reached retirement but still need to build their own safety nets and cushions as the cost to retire continues to go up, even when retired.

There are companies like Rocket Dollar that handle the paperwork for you for $15/month.

Not mainstream but not a secret either.

I don't think too many "peasants" would be able to make $15/month from it, much less any actual gain.

I think many could

No? I think just about any dummy (myself included) with a RD LLC that put money into crypto Q3 of last year paid for centuries of RD fees in a few weeks. The whole point is that it's a casino with some rational guesstimates behind it. You take a chunk of your retirement that wouldn't sting too bad if you lose it and you invest it in something that is wildly speculative but that you think has a high upside. Either you go broke with a small chunk of your total nest egg, or you turn that small chunk into something many times the size of your "main" nest egg.

Trust me, compared to the people moving real money in these markets we are all peasants.

Peasants with LLCs... Sure. And using crypto as an example only strengthens the argument that what you're doing is a tax dodge.

How so? I still have to report value of the account to the IRS by law, which is enforced by the trustee. If I get audited it's stunningly easy for the IRS to trace from dollars in IRA to crypto bought and sold, including profits taken. I think you're overestimating your understanding of the whole process.

There is literally no societal benefit whatsoever to lowering taxes in a way that incentivizes people to invest their retirement savings in crypto speculation.

The entire point of our IRA/401k laws is to give people incentives to save money for retirement in the hopes that they will have a nest egg of stable assets that will allow them to leave their jobs, making room for the next generation and reducing the burden on families and social services.

The whole system was created because penniless old people are a corrosive social problem. These reforms just illustrate how much we've lost the plot on the original idea.

> My retirement fund benefited enormously from the Q3 2020 crypto market gains, which would not have been possible without my LLC.

I have a single member LLC and a simplified employee pension plan (SEP), but don't understand how one gets crypto into a SEP without buying something like Grayscale (GBTC) through the open stock market.

The LLC creates an account at e.g. Gemini. Talk with your trustee about it first.

trustee? Lol, it is just me. I thought that crypto exchanges don't let business entities open accounts. If they do, if I open an account at Gemini under my LLC how then do I get that into my SEP though?

A SEP, and other retirement accounts, are trusts. The manager of your accounts is the trustee of those accounts. It can't be just you with a retirement account, there is always a trustee.

E.g. Mass Mutual Trust Company, Directed Trust Company, etc

The LLC is owned by the SEP (the trust). Anything owned by the LLC is in the SEP.

You shouldn't be so quick to jump to assuming someone doesnt know what theyre talking about. Trustee is a technical term with meaning in this context. You should look into self-directed 'checkbook' IRAs.

rocket dollar ( or similar service ) creates a single member LLC with checkbook self-directed IRA fund access. They become your self directed IRA trustee. You then create a bank account in the name of the LLC, followed by an account with coinbase or similar under the taxID of your new LLC. You transfer money from your LLC bank account to coinbase LLC account (being careful to never comingle wallets with personal accounts) and do whatever you need with it. You can pull the crypto out of coinbase and hold it in a wallet if you want as well (as long as you bought that wallet with 401k funds)

This effectively bans you from making a retirement investment in yourself - and takes a great deal of money off the table for innovation. So many companies are seeded with capital of a person putting 401K money into their own company. The retirement fund and the home are really what most people have to use to create businesses. Frankly, this sets the US back 250 years, and bars the middle class from starting businesses.

The traditional IRA and 401k were introduced in 1974, the Roth IRA in 1997. They were never intended for rich or poor people to speculate in risky one-off investments. How does this rule set the US back 250 years?

https://en.wikipedia.org/wiki/401(k)#History : "Congress [... enacted the ...] Internal Revenue Code Section 401(k) as part of the Revenue Act.[8] This occurred on November 6, 1978."

It doesn't ban anything at all.

It just refuses to give you a tax break when you do it.

This is an effective deterrent, and would likely be enforced with a tax penalty. edit: By not allowing me to have the tax benefit, you effectively reduce the incentive to invest in my own business. This seems like a law that is aimed at fat cats that will miss, largely because fat cats aren't going to be investing out of their own retirement. On the other had, my neighbor just used $80K of his 401K to buy three vans for a new HVAC repair company. Had that been taxed, he would have had enough for one, maybe two vans, and been on a much worse cash flow trajectory.

Deterrent from what, starting a business?

Your theory is that for 250 years America's entrepreneur class has been primarily driven by raiding their own tax-advantaged retirement accounts?

Also if your neighbor story is for real what happened there is he took a loan against his retirement account or did some kind of ROBS transaction. It's already illegal for him to interact with plan assets as part of a self-directed IRA, so he didn't use one to invest in his own business and buy vehicles. Hence this story has nothing to do with the topic at hand.

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