Good point. The people using this loophole are very wise in the art of manipulating their basis.
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It’s dumbfounding that a guy worth $4,500,000,000 can slip into a Roth IRA at all. A single person making more than $76k is not supposed to be eligible to contribute to an IRA and if one makes more than $140k he/she can’t contribute to a Roth IRA.
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Yes Roth IRA abuse needs to stop. Especially if valuations are being manipulated.
I would hardly call anyone with a 5 Million retirement account Mega Wealthy.
If I recall correctly 7000 was limit on IRA contribution for traditional IRA is there no limit on Roth?
For the rest of this rabble, IRA’s make their language confusing and there are different kinds that are only subtly different but have all these weird regs.
But hahah those with military family members and teachers - my seven hundred dollars is safe from your rapacious tax-funded salaries. The joke’s on you!
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I’m not interest - ed.
Don’t you worry, M. I know with your grit an determination that you’ll make Denny’s Manager one day.
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this
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Too old. Plus which the last job I had in the industry literally had the title “salad assistant.”
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Save 10% of your paycheck every month!
What?
You find that hard when you are making minimum wage? Clearly your terrible personality and weakness are to blame.
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Have you thought about night school to learn about copier repair?
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Listen to you. Everyone with 40 bucks or so to spare has a multifunction machine to do that stuff and if it breaks they throw it out and get another. Career-advise better.
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Uh-oh!
Except that if you put in the maximum for as long as Roths have existed, then you aren’t going to have $5M. If you rolled over a 401(K) into a Roth, you had to pay income tax on the amount, because you are going from a vehicle that taxed at withdrawal to one that’s for after-tax deposits. Therefore, while i’s perfectly legal, very few people are going to do it, unless they can take advantage of tax codes in ways that Congress probably never intended:
- They under-value assets that are not publicly traded when depositing and/or
- They do their roll-over when they have a capital loss to offset the gain.
When Romney did his financial disclosures, he had over $100 million in an IRA, which is basically impossible even for the best investors without exploiting tax loopholes, like carried interest.
People who are in senior positions in Venture Capital firms or are the major shareholder in a company can take advantage of that power to value their assets in advantageous ways.
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Ditto pour moi. Me, about 40%. I get sick thinking about it.
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To my way of thinking as the son of schoolteachers, the more outrageous inequality is between the full taxation of traditional IRA and 401k funds after the individual’s death, and the multimillion dollar estate tax exemption given to every other reservoir of wealth. So Dad inherited Ma’s IRA and her balance was added to his, slightly altering his formula for retired minimum distributions. If and when I inherit Dad’s my RMD’s begin immediately whether I’m qualified to withdraw my own savings or not. Fully taxed.
To be clear, I think the unfairness should be resolved by taxing richer estates more, not by giving lucky guys like me a bigger break than someone whose parents had no savings.
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ICYMI there’s another way financial companies screw over their clients as well. In this age of instant money transfers, the big financial companies live in the 19th century when it comes to handing over your money. If you’ve ever transferred money from one big finance company to another, some insist on sending a live check directly to you. But by the time you’ve gotten the check and the funds have been deposited in your new account, over two weeks have gone by. Meanwhile, your account was closed at the old firm before the first day was out. So where was your money sitting for half a month? Why in the firm’s house account, where it was earning interest. Nice little scam right? I mean a few tenths of a percentage point against a few hundred thousand isn’t much but combine hundreds or thousands of people a week, and do it for decades and it’s a pretty nice chunk of change they’ve taken from your pocket. Imagine loaning your best friend $1,000 and finding out he used the money to make himself $1,000 and gave you only your original $1k back. You’d feel like you’d been scammed, wouldn’t you? Same idea.
As I recall, from back when I was a bank teller in the 80s, there are regulations preventing banks from sitting on checks for longer than it takes for them to clear. Since people can now take pictures of checks to deposit them, there’s not much float left.
My wife and I had mid-level decent paying jobs in the DC area. I worked for 36 years, she worked for 20. No kids, We bought a house before the run-up in the aughts; lived pretty modestly compared to our peers (easy with no kids); maxed out our contributions and invested fairly conservatively (the usual 60/40 target for olds) …we’ve been very lucky in many ways through no fault of our own with not much planning ahead. Pisses me off to no end that Thiel, etc. hijacked this system for their own gain when we worked, followed the rules, and got some benefit. We’re happy to take a tax hit, though we’re a bit below 5M at this point. FWIW, after age 72 you need to start drawing it down (the Required Minimum Distribution or RMD), so you do need to pay taxes at some point (but that’s not the case for Roths, just 401Ks/503Bs). The above linked article suggests that the Roth’s may have been pre-loaded for this sort of abuse…p.s. I’m not sure the old fashioned, centralized pension system was that bad an idea. Allowing individuals to manage their own investments is a recipe for disaster. Again, we’ve been lucky (so far).
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Well I am halfway through my course on vacuum cleaner repair and once I get my appliance repair license, then I’ll be able to live out my life in ease as people call me up to fix their blenders and toasters.
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Recent experience screams otherwise. They may not “sit on” the checks but I promise you they take the maximum amount of time to print them, stick them in envelopes and slowly get them into the mail - it takes two weeks.