Mitt Romney's $102 million IRA; it takes someone special

Quote from atticus:

I have an IRA (no longer contribute due to asset restrictions). It's my understanding that there are defined contribution limits.
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Only for the "deductible" part.

For the "excess contributions", there is a tax of 6%/year. If you have $100M in there, that's a $6M tax/year. If that $100M is generating $6.1M in cash flow/year, that's $100K tax-deferred and you've paid your 6% tax, too.

If that $100M is generating $15M/year in cash flow, that's $9M/year in tax-deferred income.

Given Romney's connections in private equity, I would bet his $100M is generating closer to 15%/year than 6.1%/year, at least on average. All from just putting his assets into an IRA.

The tax-deferral absolutely makes it rational for Romney to make "excess" contributions to his IRA, even if there is a yearly tax for doing so.

I have an IRA account at a retail brokerage. I never get any tax-related documents for that account, regardless of how many trades I make during a year or what my account P&L is, so I know this is true from personal experience.
 
Quote from logic_man:

Only for the "deductible" part.

For the "excess contributions", there is a tax of 6%/year. If you have $100M in there, that's a $6M tax/year. If that $100M is generating $6.1M in cash flow/year, that's $100K tax-deferred and you've paid your 6% tax, too.

If that $100M is generating $15M/year in cash flow, that's $9M/year in tax-deferred income.

Given Romney's connections in private equity, I would bet his $100M is generating closer to 15%/year than 6.1%/year, at least on average. All from just putting his assets into an IRA.

The tax-deferral absolutely makes it rational for Romney to make "excess" contributions to his IRA, even if there is a yearly tax for doing so.

I have an IRA account at a retail brokerage. I never get any tax-related documents for that account, regardless of how many trades I make during a year or what my account P&L is, so I know this is true from personal experience.
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http://vanguard.com/us/whatweoffer/ira/whichira?WT.srch=1
 
Gov. Romney’s taxes look to be compliant. Sure there are some valid questions, but that’s the case with most taxpayers. - GreenTrader Weblog
http://www.greencompany.com/blog/index.php?postid=135

I wondered about Mitt Romney's IRA size, too. I raised some questions that others haven't and they could be off base.

For the huge chunk of Romney's IRA growth in size, I suspect carried interest investment gains - which can be huge - on positions he received in connection with his Bain management agreements. While some tax attorneys think that's fully legal, I have some lingering questions. Where it might be inappropriate to receive business income - like management and incentive fees - in your IRA, it's probably not a problem to receive a carried interest on investment income. Private equity and hedge fund managers structure carried interest in deals in lieu of incentive fees. Carried interest is a share of capital gains, whereas fees are business ordinary income.

I agree with other pundits on the usual suspects. Low valuations on private equity turnaround investments made through C-Corps using high leverage, so equity is a low value and there is no UBIT taxes in the IRA, since it's offshore in a C-corp structure.

Rollovers can transfer big dollars into an IRA, but I haven't heard it's a "Rollover IRA."

It's okay and smart to trade in your retirement plans. That's not running a business. Trade in taxable accounts to achieve trader tax status for business deduction treatment.

If Romney was planning to run for office, and if he wanted to keep his public tax returns more modest, he might have seen the added value of parking income producing investments in his IRA. So, his IRA may have become a dumping ground for everything he didn't want to show the public details on. Plus, as a smart guy, he saw the incredible value of tax deferral.

This all seems fully legal, with the possible exception of the carried interest. His answer should be that carried interest is not business income, it's capital gains and that's okay. The reason I wonder about it is because an IRS audit manual claims that carried interest is disguised incentive fees, but that's probably more of a question for hedge funds and not private equity. Audit manuals do not dictate tax law, the code does, and carried interest has withstood challenge. Democrats tried to repeal it, but Republicans blocked them.
 
Quote from atticus:

Ask Romney about his disdain for Dade Behring's common shareholders, and more importantly, the employees... as he took over $300MM in "dividends" out of the co. It failed a year later.
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LOL'ing at a trader/investor/capitalist complaining about another trader/investor/capitalist capitalizing on a transaction.

Pot...meet Kettle

Would anyone be complaining if Joe Schmoe bought a pizza business that was upside down and eventually drained its cash, sold its equipment and closed the place down?
 
Given that this man has known he wanted to be President for decades (maybe forever) I am surprised by his inept handling of the PR aspects of his wealth. Legal or not legal is not the threshold ... electable or not electable is.

To the white working class guy making $60K (a bedrock Republican constituency) Swiss and Cayman accounts hooked up with $102,000,000 in an IRA sounds a bit much. Most of these guys believe there was some fast and loose action to get a guy there. Throw in the fact that he seems very reluctant to talk about Bain, his wealth and the cult he was born into and you have the makings of a PR disaster.

I'm no fan of Obama. He came to the job devoid of experience in most of the areas that a president needs to have mastered BEFORE being sworn in. The presidency should not be a trainee spot. He should have been beatable in 2008 but could not be beat by the clown show he ran against. This cycle anyone running against an 8.2% unemployment rate should be a lock but Romney simply does not seem to understand that The Daughters of the American Revolution will not decide an American election. I make this election pick'em yet by all rights Obama should be a big underdog to almost any reasonable candidate. But Romney is not a reasonable candidate. He is, as a campaigner, an empty suit running against a failed incumbent.

America loses either way.
 
Quote from atticus:

http://vanguard.com/us/whatweoffer/ira/whichira?WT.srch=1
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Look, I know you're not dumb, but let me try to explain it to you simply.

That page gives you info on the maximum amount which you may contribute and DEDUCT FROM YOUR INCOME TAX FOR THAT YEAR IF YOUR ADJUSTED GROSS INCOME IS BELOW A SPECIFIC THRESHOLD.

It says NOTHING about how much you can contribute overall.

They are two entirely different things.

Just accept that fact and move on.
 
Quote from clacy:

LOL'ing at a trader/investor/capitalist complaining about another trader/investor/capitalist capitalizing on a transaction.

Pot...meet Kettle

Would anyone be complaining if Joe Schmoe bought a pizza business that was upside down and eventually drained its cash, sold its equipment and closed the place down?
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No numbnuts, he bankrupted a profitable industrial company by taking a completely arbitrary "dividend" which the assets of the company could not remotely support. IMO, it amounts to fraud and embezzlement.

And no, I am not an Obama supporter. You want to make this partisan when it has nothing to do with politics.
 
Anyone who thinks atticus is an Obama supporter is simply not familiar with his thinking as expressed in his posts. His opinions here are not a result of partisan politics.

Quote from atticus:

And no, I am not an Obama supporter. You want to make this partisan when it has nothing to do with politics.

[/B]
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Quote from Swan Noir:



To the white working class guy making $60K (a bedrock Republican constituency) Swiss and Cayman accounts hooked up with $102,000,000 in an IRA sounds a bit much. Most of these guys believe there was some fast and loose action to get a guy there.
More...

Romney's got the white working class guy vote locked down.

Whatever the guy did as a financier, the fact is that the President of the United States is not a job in which one does a lot of private sector outsourcing, but it is a job in which one can create a lot of Federal government efficiencies by firing government workers and replacing them with technology.

Since the "white working class guy making $60K" probably isn't a government worker, why would he care if a ton of them get fired? That "white working class guy" knows it will be a bunch of low-level government employees who can easily be replaced by kiosks and web sites who will bear the brunt of any downsizing movement by a Romney-led administration. While the "white working class guy making $60K" probably doesn't relish the idea of competing against those fired government workers for his next job, since those fired workers are probably the most incompetent of the incompetent, I doubt they're that much competition in the private sector job market.

http://www.realclearpolitics.com/ar...y_white_male_gap_white_women_kuhn_114579.html
 
Quote from logic_man:

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It says NOTHING about how much you can contribute overall.

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it says to me you haven't made any Roth contribution. If you meet all the requirements the max amount is 5K to 6K per year
 
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