In this week’s video, Casey breakdowns the recent ProPublica article that drew attention to some ultra-wealthy investor’s massive Roth IRAs.
The Roth IRA was designed to help average Americans save more money for retirement. So it’s no wonder there has been quite the backlash against wealthy investors exploiting this.
But Casey highlights another key takeaway that is within the average everyday investor’s control.
The $5 Billion Roth IRA – Full Transcript
**For a downloadable PDF version of this transcript, click here!**
Casey Mullooly: In episode 254, we’re going to talk about the $5 billion Roth IRA. Welcome to the Mullooly Asset Show. I’m your host, Casey Mullooly. Thanks again for tuning in. So, about that $5 billion Roth IRA, you might’ve seen the headline floating around recently. According to a ProPublica article published in the last couple of weeks, Peter Thiel, the well-known venture capitalist and one of the founders of PayPal has a $5 billion Roth IRA.
That’s right, billion with a B. So, he was able to grow his Roth IRA from around $2,000 in 1999, to just over or around $5 billion today. He was able to invest in some early companies, such as Facebook, and his account has just exploded.
Casey Mullooly: So, the Roth IRA was designed so you fund it with after tax dollars, and then you’re able to take the money out from the account without paying taxes down the road. So, Peter Thiel is going to be able to access this money tax-free in a couple more years, as long as he waits like everyone else has to wait, until age 59 and a half.
So, this has definitely appealed to people’s rage senses, and people have been shaking their fists and griping about tax avoidance and how these ultra-rich people just exploit the tax system that was designed for average, everyday American investors to help them save for retirement. Yes, that is what the Roth IRA was designed to do. And yes, Thiel and some other well-known wealthy investors have exploited that loophole. But the point is that investing and saving for retirement in a tax smart, in a tax diversified way is a very wise thing to do.
Casey Mullooly: We’re always on the lookout to help folks execute things like Roth conversions or to line up IRA or RMD required minimum distributions in a tax smart and tax prudent way. So, we’re not blowing up their tax bills in retirement when they’re finally taking all of their hard-earned money out.
It’s just good planning, it’s just good financial planning, it’s good retirement planning, it’s good investment planning. And look, you’ve got a point, it does definitely rub some people the wrong way that Thiel has been able to amass this fortune and won’t pay any taxes on it, but he did it in a completely legal way.
Casey Mullooly: And I’m not saying that everyone can amass $5 billion in the Roth IRA, that’s definitely not what I’m saying, but what I’m saying is we can be smart about our tax situations.
We can plan for future tax situations in advance and do things in a smart and prudent way. And if you have questions about how to do that, you know who to call. We do this all the time for folks, and it’s definitely something that we can help you out with too. So, be smart about those taxes. It’s important. That’s the message for 254, we will see you again for 255.
To hear more about tax planning, be sure to check out our recent Youtube video!