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> has $5 billion socked away in a tax free Roth IRA How? You can only contribute a maximum of $7,000/year to all IRAs you own.
https://www.propublica.org/article/lord-of-the-roths-how-tec...
I'd recommend reading the proposed provisions themselves directly from the Ways & Means Committee instead of the main article urging action: https://www.advantaira.com/wp-content/uploads/2021/09/WM-Tax... Highlights: 1. You can't add new contributions to tax-advantaged accounts if their total value exceeds $10 million and you make over $400K for single filers, amounts indexed to inflation. 2. There are required minim…
> 3. Closes the backdoor Roth IRA ( https://www.bogleheads.org/wiki/Backdoor_Roth ) only for people making over $400k. Closes the mega backdoor ( https://www.bogleheads.org/wiki/Mega-backdoor_Roth ) for everybody. Just a nit-pick of your analysis. The proposed legislation closes both the megabackdoor Roth (employee after-tax contributions) and backdoor Roth (prohibition on IRA contributions from being converted) rega…
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They should close 401k and all other tax advantaged retirement accounts, and just have regular IRA and Roth IRA for everyone, and remove employers from the equation.
They'd need to raise the limits then - the contribution limits on traditional/Roth IRAs are significantly lower than employer plans like 401ks.
The whole article is predicated on the lie that low and middle income earners are buying private placements and LLCs in their IRAs. They are not. Full stop.
That's a massive flex on your part, I know a co-worker who did this and he earns less than 185k a year.
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He invested the entire amount ($1700 at the time, iirc) into his new startup before they'd raised any money: Paypal. Then used the proceeds from that to invest in variety of things, including an early (angel?) investment in Facebook. It's all detailed in the Propublica story where they described his Paypal investment as a "sweetheart deal".
There's a huge survivorship bias with this. He put his IRA on 00 and it hit, but most of the time, it won't, and most people wouldn't take that bet. This is a lot of effort to solve a non-problem that got press coverage.
Thiel bought his shares at $0.001/share in the same round where the company was valued at $0.20/share. At very least, he should've been capped at 10,000 shares in the IRA but instead he contributed 1.7 million ($2k/year IRA contribution limit at the time).
It's like describing a software bug as a non problem since it only lead to two intrusions.. that you know of.. that cost your company a ton of money.
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This has no impact on the average person in the low to middle class income range. This is just a loophole allowing the rich to put a bunch of money into their IRAs and watch it grow in a tax advantaged way. The average person that's putting the max of $6k (or less) into their IRA is not impacted by this and it's business as usual for them. I believe this is in response to people like Peter Thiel https://www.propublic…
The $6k/yr limit on IRA contributions is a joke. Maybe most "low to middle class people" aren't contributing more than that, but, regardless, if that's all you're doing, you are completely fucked. The backdoor Roth part of this... basically anybody making even an entry level Tech salary should be doing it. That's not just for the Peter Thiels of the world. (By "should" I don't mean "I would prefer if policy were this…
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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…
> 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 compro…
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What's wrong with winning? Why not let people keep winning?
The purpose of tax advantaged retirement accounts is to reduce the number of destitute people in retirement. It achieves this goal by providing a tax incentive on regular investment for people who would not otherwise invest. If you won the lottery on crypto then you aren't going to be destitute in retirement. Pay the capital gains and enjoy your wealth. Similarly, if you are a high earner and can afford to take advan…
The purpose of tax advantage retirement accounts when originally introduced by ERISA was to give employees of private companies a safety net in cases where their pension defaulted or when a pension wasn't offered in the first place. There's really no mention of it being specifically for people who are destitute or would not otherwise invest. Traditional IRAs are available for everyone, even high earners, no gatekeeping.
> Pay the capital gains and enjoy your wealth.
Traditional IRAs are taxed on withdrawal and function much like other investments.
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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?
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.