Peter Thiel Has Accumulated $5B in a Roth IRA (opens in new tab)

I'd go with a cap on the amount of returns that are tax free. Put after-tax money into a Roth, and you can take out the original investment plus up to some limit tax-free. Anything over that would be treated just like a regular IRA withdrawal.

> In my opinion (and it is an emotional judgement), I think America is based on freedom, and Roth money is money you already paid taxes on, and you should be allowed to invest it however you want. It's your money after all.

But you don't pay tax on the earnings of your Roth investments. That's the whole point of the Roth. Your investment choices are:

1. No IRA. You pay tax on your income, and when you invest after-tax money you pay tax on the investment earnings. You can withdraw investment money at any time.

2. Regular IRA. You can defer tax on some of your income and invest that money. You pay tax on the investment earnings and on the original income when you withdraw them from the IRA. You also pay a penalty if you withdraw money before age 59 1/2.

3. Roth IRA. You pay tax on your income, and when you invest after-tax money you do not pay taxes on the investment earnings. You also pay a penalty if you withdraw money before age 59 1/2.

However, if you can somehow get 1000x returns without breaking the rules then sure there isn’t a direct cap on how large Roth IRA’s can grow.

All money is debt. For you to have money, someone had to get into debt. Either privately via bank loans, or the public via the government spending (most likely bank loans, only 4% is government spending).

It's not JUST your money. Your money is also someone's debt.

So when Thiel stashes 5 billion away in a Roth IRA instead of spending it, that's 5 billion of debt OTHERS owe. And that's 5 billion in INCOME he is depriving others. (of course he isn't actually holding billions of DOLLARS, but assets valued in dollars, so this isn't exactly the same thing).

Think of it like musical chairs. Thiel just took one of the chairs away (put it in the closet) and someone has to lose the game unless more chairs are added to the game.

In other words, Thiel's winnings ended up as someone else's losses. The game keeps going as long as someone keeps bringing chairs (the government, or bank loans) but as soon as that stops (2008 or covid), someone will lose, and it isn't Thiel. It will be millions of poor people who will lose their jobs, homes, etc.

So the question is, should people hoard debt (and deprive others of income) and gain that much power?

That's the question we as a society need to ask ourselves. And so far, judging from the comments here, everyone is ok with that.

But as I mentioned before, Thiel doesn't hold cash in the IRA, but assets valued in billions right? So in some sense he is only wealthy if there is a system that can convert those securities into cash. In other words, he is only wealthy as long as the system keeps going. But his efforts ultimately undermine that same system (wealth inequality undermines the system, this is a historic fact).

We have a limit of $6000 CAD for TFSA (basically our version of the Roth here) across the board. And not a lot of Canadians make full use of this.

I'm not saying what he's doing is illegal, but the article suggests that he jammed in enough eBay shares @$0.30 that when it was $19 per share, worth about $31.5M USD.

So somehow he moved about 1.6M shares worth about half a mil?

A yearly contribution room regardless of income would at least stop someone from stuffing lots of shares in a short time into Roth. It probably has the unintended consequences of being regressive to those who don't have the cash flow at all to make use of the Roth IRA.

Buying assets that you know are being sold for below market value with you IRA is illegal. Thiel sold himself paypal stock for .1 cents per share after he had obtained funding that valued the company far above that. I'm not going to say what he did was illegal because that's for courts to decide, but it certainly seems like the IRS has a case.

I often see people say this in a way that suggests one shouldn't criticize something if they don't have a viable alternative in mind. In point of fact, it's perfectly fine to feel that something might be wrong without knowing what the alternative should be.

$6k/yr for 30 years at a very-high interest rate of 15% results in $31.3M .. so capping Roth-value at $50M will prevent extreme abuse. Though, I suspect many will argue for a lower cap

Think of all the obvious examples of utterly heinous behavior that were not illegal when they happened. Most of the very worst were not. Start with the bogeymen of evil.

As for tax dodging. FFS if you've got more money than your grandchildren can spend and you still want to not pay a contribution to the society that enabled that and protects it from just being taken from you? That's what makes you happy? Because it's happiness you're getting. You're way past toy money at that point, you can be as vapid as to buy more Bugattis and fly everwhere first class either way. You want to avoid tax for charity? Charity is tax deductable so that's BS on roller skates too. And I /hate/ sounding like an angry socialist because I'm not even close to being the latter.

Is there a history of what trades he made and over what period? A $2k investment to $5B is insane.

Publicly traded companies are under the watchful eye of SEC, and have already proven to not be completely bogus.

Why? The money that goes into an IRA already has income taxes taken out.