The bill states that Trader Tax or “Securities Transfer Tax” is a proposed 0.25% tax on such financial instruments as stocks, options and futures. I would assume that it would be passed along to purchasers of such collective funds in some way. It would only make since, as the owners would be taxed as they transferred the underlying stocks, futures, etc.

With regards to 401k I have no reason to think that it would not apply. It’s not all that unbelievable as the US had a Transfer Tax from 1914 to 1966. It levied a .2 percent tax on financial transactions. And on top of that in 1932, Congress more than doubled the tax during the great depression.

The collective “word on the street” is that it is unlikely to pass. I will do some research over the weekend and try to get more details and post.

Thanks,

Steve

I have two questions regarding this proposed “Trader-Tax”, which I cannot find answers to.

My question specifically pertains to how this proposed tax might apply to an individual who trades open-ended mutual funds (not ETFs):

1. “Would an individual who daily trades open-ended mutual funds (such as Rydex, Profunds, or Direxion — shares priced at 4pm daily) be subjected to this proposed tax? And if so, what minimum holding period would be required to avoid this proposed tax.”

2. “Would trading open-ended mutual funds in a tax deferred account (IRA, 401k, or Variable Annuity) be subjected to, or exempt from, the proposed trader tax? (i.e. funds cannot be withdrawn from such tax-deferred accounts until age 59 1/2).”

Also, in general, I would appreciate your opinion on whether this proposed Trader-Tax HR 1068 legislation is likely to pass.

Thank you very much for any thoughts. These are difficult enough times,…this proposed tax is unbelievable.