Support our online development, and advance our onground research initiatives in free market economics, as we seek to showcase the brightest Next-Gen minds.
THE ME-P DISCLAIMER: Posts, comments and opinions do not necessarily represent iMBA, Inc., but become our property after submission. Copyright © 2006 to-date. iMBA, Inc allows colleges, universities, medical and financial professionals and related clinics, hospitals and non-profit healthcare organizations to distribute our proprietary essays, photos, videos, audios and other documents; etc. However, please review copyright and usage information for each individual asset before submission to us, and/or placement on your publication or web site. Attestation references, citations and/or back-links are required. All other assets are property of the individual copyright holder.
By Nadia Sussman, Sherene Strausberg and Justin Elliott
ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox. Series: The Secret IRS Files Inside the Tax Records of the .001%
***
***
Last week, ProPublica published the story of how PayPal co-founder and tech investor Peter Thiel was able to turn a Roth IRA initially worth around $2,000 into a jaw-dropping $5 billion tax-free retirement stash in just 20 years.
The story is even more remarkable because Congress created the Roth IRA in 1997 to encourage middle-class Americans to save for their golden years. Most Americans have struggled to do even that; the average account was worth about $39,000 in 2018. But Thiel and other billionaires have managed to turn their mundane Roths into giant onshore tax shelters.
Thiel was able to launch his Roth into the stratosphere through a complicated strategy involving the purchase of nonpublic stock at bargain prices — the kind of deal most people can’t access. Experts say it risked running afoul of rules designed to prevent IRAs from becoming illegal tax shelters. (Thiel’s spokesman didn’t respond to questions.)
Other ultrawealthy Americans have used different means to build Roths worth tens or hundreds of millions of dollars. Senate Finance Chairman Ron Wyden is now looking at how to end the use of the Roth as “yet another tax dodge that allows mega millionaires and billionaires to avoid paying taxes.”
How are they able to do it while you can’t? Check out our explainer of one way the Roth works for the ultrawealthy and not for you.
***
Your thoughts and comments are appreciated.
Citation: https://www.r2library.com/Resource/Title/0826102549
***
THANK YOU
Share this:
Filed under: Investing, Portfolio Management | Tagged: Justin Elliott, Nadia Sussman, PAYPAL, ProPublica, Ron Wyden, Roth IRA, Sherene Strausberg, Thiel |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Unless you have access to nonpublic stock of a future tech giant, it’s pretty hard to turn a humble retirement account into a tax-free piggy bank.
SAM
LikeLike
ROTH
Beginning in 2023, workers will be allowed to receive matching contributions to qualified retirement plans on a pre- or after-tax basis, meaning you can choose to have your employer make matching contributions to a regular 401(k) or a Roth 401(k), if available. In the past, only pre-tax matching contributions were allowed. SEP and SIMPLE IRAs will also be able to receive Roth contributions. This wasn’t allowed previously.
Note that this provision is optional, and plan sponsors will decide whether to allow matching Roth contributions. It may also take time for some plans to adopt these changes given how late in 2022 the law was passed. It’s likely that many retirement plans won’t implement this change right away.
Sam
LikeLike