Can I trade in an ETF that shorts with an IRA account?

Answer 1

YES you can buy a short ETF within an IRA. In reality you are "long" the short strategy because the ETF rises in value as the market falls.

I use short and double short ETFs as hedge instruments within IRAs all the time.

I think the previous poster misunderstood your question.

Answer 2

ETFs are a class and they have special rules. You can short ETFs on the down-tick (with regular stocks it must be on the up-tick before you short sell)--but that assumes that your account permits you to short sell. The issue is not the IRA, which does not care as long as you pay your taxes on the money you take out, the issue is your brokerage account set up for you to sell short. It is a finance thing, so if you can qualify to sell on margin, you will probably qualify for an application to sell short. Finally, then, your credit standing makes the primary determination. Pass all of these steps? Yep, you can do that.

(Now if I read it wrong and you are worried that an ETF does short selling, then the issue comes back to whether it is an ETF. Exchange Traded Funds are minimally managed mutual funds. Short-selling is an active managed feature. So if the fund short sells, it probably isn't an ETF. As for whether your IRA permits it, it really doesn't care--see the note on taxes above)

Answer 3

You can't sell short in an IRA account because an IRA can't have a margin account balance (the offset is considered borrowing and hence a taxable withdrawal - see IRS publication 590 ). But you CAN buy a ETF that holds short positions.