Learn the many ways to build your Roth IRA

[MULTIZ321]

Learn the many ways to build your Roth IRA

Learn the many ways to build your Roth IRA

Roth IRAs have many great benefits. In last week's article I discussed the tax-free fe ...

www.abqjournal.com

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Richard

 

[Ralph Sir Edward]

Congress is currently considering cutting off many of those ways.

House Democrats propose new retirement plan rules for the rich, including contribution limits and a repeal of Roth conversions

A proposal from House Dems would repeal Roth conversions in individual retirement accounts and 401(k)-type plans for those making more than $400,000 a year.

www.cnbc.com

 

[rickandcindy23]

From your article @Ralph Sir Edward:

They also follow Democrats’ outcry following a recent ProPublica report that Peter Thiel, a PayPal co-founder, owns a Roth IRA that had grown to $5 billion in 2019, up from less than $2,000 in 1999.

How did that happen? We started our Roth about that time and have contributed our max each year and don't have $5 billion. That cannot be. Not a Roth. How much was he allowed to put in?

 

[VacationForever]

From your article @Ralph Sir Edward:

They also follow Democrats’ outcry following a recent ProPublica report that Peter Thiel, a PayPal co-founder, owns a Roth IRA that had grown to $5 billion in 2019, up from less than $2,000 in 1999.

How did that happen? We started our Roth about that time and have contributed our max each year and don't have $5 billion. That cannot be. Not a Roth. How much was he allowed to put in?

Probably used backdoor Roth IRA.

 

[Brett]

Probably used backdoor Roth IRA.

yes
https://www.marketwatch.com/story/how-peter-thiel-turned-2-000-in-a-roth-ira-into-5-000-000-000-11624551401

 

[Ralph Sir Edward]

From your article @Ralph Sir Edward:

They also follow Democrats’ outcry following a recent ProPublica report that Peter Thiel, a PayPal co-founder, owns a Roth IRA that had grown to $5 billion in 2019, up from less than $2,000 in 1999.

How did that happen? We started our Roth about that time and have contributed our max each year and don't have $5 billion. That cannot be. Not a Roth. How much was he allowed to put in?

How did he get rich in the first place? By building a big company. Now if he valued the initial stock of that company as near zero in the beginning, and put said stock in an Roth IRA, when the company became worth billions, so did he.

If you had access to the same type of start-up, you could have done the same thing. (RIght, like we have such access. . . Mitt Romney did the same thing, as part of his venture capital job, before he got into politics. Remember, he was worth $200 million in his Roth IRA in 2012.)

 

[Ralph Sir Edward]

As Sheriff Bart said about Mongo's release = "It's legal. .. "

 

[MULTIZ321]

The RMD Solution to the Hassle of Filing Estimated
Taxes in Retirement: Kiplinger.

The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement | Kiplinger

If you don't need the money to live on, wait until December to take your RMD and ask the sponsor to withhold a big chunk for the IRS.

www.kiplinger.com

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Richard

 

[rickandcindy23]

Probably used backdoor Roth IRA.

Oh, I guess he did. So the regular folks with $200K in Roths they saved for years are going to be penalized. Makes sense, right?

 

[bizaro86]

In Canada private company shares are not allowed in a TFSA/RRSP (the rough equivalents to Roth/regular IRAs) for this reason.

Was the pricing on that PayPal stock Peter Thiel put in a fair market price. I doubt it. Is there any way of proving that. Nope.

And really the opportunity to buy it was payment for his labor in the startup. You can't get wages paid directly into a tax free account, no reason stock compensation should be different.

 

[Ralph Sir Edward]

Oh, I guess he did. So the regular folks with $200K in Roths they saved for years are going to be penalized. Makes sense, right?

It's the American way! The average folks always get it in the end. . . .

 

[rickandcindy23]

It's the American way! The average folks always get it in the end. . . .

I just read an article that talked about this threat by Congress, and the bottomline seems to be that experts in the financial sector are thinking this is all talk and no followthrough. I hope so, but not for the sake of people with billions in those Roths.

 

[geekette]

Oh, I guess he did. So the regular folks with $200K in Roths they saved for years are going to be penalized. Makes sense, right?

What penalties are you referring to? Your 200k Roth remains tax free for withdrawals and no RMDs.

 

[TheTimeTraveler]

What penalties are you referring to? Your 200k Roth remains tax free for withdrawals and no RMDs.

No current penalties but the rules can potentially be changed at any time, especially since it appears we are heading towards an environment where the Government feels the wealth should be more equally distributed from those that do to those that don't.

Who do you think is paying for all the Government "giveaways" during the pandemic? It's the taxpayers like you and me.



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[geekette]

No current penalties but the rules can potentially be changed at any time, especially since it appears we are heading towards an environment where the Government feels the wealth should be more equally distributed from those that do to those that don't.

Who do you think is paying for all the Government "giveaways" during the pandemic? It's the taxpayers like you and me.



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No legislation is fast, so I don't agree that rules can change at any time. Retirement plans are a function of government. How many rule changes to 401ks and IRAs since their inception? Damned few, although I have long felt that IRA and Roth contribution limits should be increased to be on par with 401k. A catchup clause showed up to help the over 50 set.

I can envision no scenario in which 200k retirement savings would be considered wealth to be redistributed. It's not wealth, it's modest savings. If you think the government is coming for a small account like that, think again.

Further, these retirement vehicles were meant for normal workers, not for the generations-long hoarding of wealth. $10mil in an IRA is A Lot. It's not "redistribution" to force spend down, it's being forced to withdraw retirement savings In Retirement, as per original design. Without that, you and me are on the hook for more government spending than the super rich that have the means to hide their assets and keep their family tree from ever having to be a worker.

 

[TheTimeTraveler]

No legislation is fast, so I don't agree that rules can change at any time. Retirement plans are a function of government. How many rule changes to 401ks and IRAs since their inception? Damned few, although I have long felt that IRA and Roth contribution limits should be increased to be on par with 401k. A catchup clause showed up to help the over 50 set.

I can envision no scenario in which 200k retirement savings would be considered wealth to be redistributed. It's not wealth, it's modest savings. If you think the government is coming for a small account like that, think again.

Further, these retirement vehicles were meant for normal workers, not for the generations-long hoarding of wealth. $10mil in an IRA is A Lot. It's not "redistribution" to force spend down, it's being forced to withdraw retirement savings In Retirement, as per original design. Without that, you and me are on the hook for more government spending than the super rich that have the means to hide their assets and keep their family tree from ever having to be a worker.

Hope you're right but never say never.....



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[rickandcindy23]

What penalties are you referring to? Your 200k Roth remains tax free for withdrawals and no RMDs.

It's currently being discussed by the congress to tax the Roth IRA's the way they do 401K's and other pension programs. When one particular party is in power, they always want to go after the rich. Go ahead and go after the rich, but leave the regular people alone.

 

[Brett]

It's currently being discussed by the congress to tax the Roth IRA's the way they do 401K's and other pension programs. When one particular party is in power, they always want to go after the rich. Go ahead and go after the rich, but leave the regular people alone.

https://www.cnbc.com/2021/09/13/house-democrats-propose-new-retirement-plan-rules-for-the-wealthy.html

"Wealthy individuals with retirement accounts exceeding $10 million would be prohibited from contributing extra savings and would have a new required minimum distribution each year, according to an outline of tax legislation unveiled Monday by the House Ways and Means Committee.
The legislation would prohibit individuals from making more contributions to a Roth IRA or traditional IRA if the total value of their combined IRA and defined-contribution plan exceeds $10 million. A defined-contribution plan is a 401(k) plan or other similar workplace savings plan.

The policy’s purpose would be “to avoid subsidizing retirement savings once account balances reach very high levels,” according to a proposal outline.



(I'm a "regular" person )

 

[rickandcindy23]

This guy thinks our Roth IRA's are safe:

IRA Crackdown Talk in Congress Is All Bluster | ThinkAdvisor

Multimillion-dollar IRAs are a growing benefit for Uncle Sam. Here's why.

www.thinkadvisor.com

 

[Brett]

This guy thinks our Roth IRA's are safe:

IRA Crackdown Talk in Congress Is All Bluster | ThinkAdvisor

Multimillion-dollar IRAs are a growing benefit for Uncle Sam. Here's why.

www.thinkadvisor.com

He's probably right unless your ROTH retirement accounts are more than $10 million per individual

 

[geekette]

It's currently being discussed by the congress to tax the Roth IRA's the way they do 401K's and other pension programs. When one particular party is in power, they always want to go after the rich. Go ahead and go after the rich, but leave the regular people alone.

I think you are wrong about reclassing Roths, I've seen nothing to indicate this shift in the works.

UNLESS you have a mega-Roth, in which case RMDs could be coming. You don't have a megaRoth so I think you can sleep well at night because they aren't coming to tax Your Roths.

 

[geekette]

A reminder: you have elected members of Congress. When you have opinions on pending legislation, contact them. This is especially important for anyone with unusual circumstances since the mainstream impacts will have already been considered.

 

[Ralph Sir Edward]

Why have RMDs for Roths anyways? The money taken out is non-taxable anyways.

If you want to leave wads of money to your heirs, you just buy single premium whole life insurance policies every year with the RMD amount. Insurance policy payouts are tax free to the recipient. Uncle Sam doesn't get a dime. . .

(I didn't pick up a FLMI for nothing. . . )

 

[VacationForever]

Why have RMDs for Roths anyways? The money taken out is non-taxable anyways.

If you want to leave wads of money to your heirs, you just buy single premium whole life insurance policies every year with the RMD amount. Insurance policy payouts are tax free to the recipient. Uncle Sam doesn't get a dime. . .

(I didn't pick up a FLMI for nothing. . . )

RMD because they don't want to let your heirs have the investments grow tax-free forever.

 

[Ralph Sir Edward]

RMD because they don't want to let your heirs have the investments grow tax-free forever.

VacationForever, there is NO tax free growth forever. See the following link.

What You Need to Know About Inheriting a Roth IRA - Retirement Tips

We recently talked about what options you have when you inherit a traditional IRA from your spouse. But what about a Roth IRA? And what if you inherit the Roth IRA from someone who wasn’t your spouse?

retirement.tips

Basically you have to take it out in 10 years, unless you are a spouse of the decedent, and a few other minor cases.

So I still ask, why do they want to force an RMD on a Roth?