Is it possible to have 42.9 million dollars in an IRA?

[BOSSHOG]

They are a fairly recent account available to savers. 40 years maybe? And during the first 35 years you could only deposit 2K per year. Now the limit is up to 6K per year for folks over 50. There is an article in MONEY Magazine about what the candidates are worth and it lists a 42.9 million dollar IRA for Romney. How is that possible? And where can I get some of that interest rate?

[antigop]

1. Some of it could be a rollover from a 401(K) -- still a lot of money though n/t

[BOSSHOG]

4. Thanks

I'm vaguely familiar with the concept, but would that not result in a large tax liability?

[Midlodemocrat]

10. I don't think so. If you leave a company and want to rollover your retirement

savings into an IRA, you do it without a penalty. IIRC, when Mr. Midlo left a company 10 years ago, that is what we did and I don't recall a penalty.

If you withdraw the money, you will be facing a penalty, but the ability to roll the money over is a tax break to someone leaving a company.

[Common Sense Party]

15. No. If you do a direct transfer (technically, not a rollover)

the money goes from the 401(k) directly to an IRA and it's all still tax-deferred.

If you leave it in the IRA until age 59 1/2 you avoid early withdrawal penalties.

You have to start taking withdrawals (and paying taxes) after you reach age 70 1/2.

[A HERETIC I AM]

17. Isn't it correct that a person with the right kind of deferred comp plan

could stash away a huge sum like that? Like an ESOP, for instance? If he had a Employee Stock Purchase feature as part of a retirement package and the shares were held in a tax deferred account, this could very feasibly add to such a sum, right?

Ever seen anything like that in your experience?

[antigop]

21. I'm thinking deferred comp as well. You beat me to it. n/t

[antigop]

24. Info on deferred comp plans --probably where most of it came from

http://www.assetprotectionbook.com/deferred_compensation.htm

>>
A qualified plan receives certain tax
preferences under the Internal Revenue Code:

*

the employer is entitled to a tax deduction for the amounts contributed to the plan;
*

the benefits grow on a tax deferred basis until they are actually paid under the plan; and,
*

distributions are generally eligible for rollover to an IRA or other qualified plan, thereby permitting further tax deferral.

>>

Looks like you can rollover deferred comp distributions to an IRA. That's probably it.

[A HERETIC I AM]

31. Yup. Good find. You're quick! n/t

[Common Sense Party]

30. Yeah, there are all sorts of comp plans, stock option plans, etc.

There's more variations than you could shake a stick at in an afternoon.

That could certainly account for some of this.

When you get right down to it, the guy has been very wealthy for many years. 43 million is not a preposterous amount for someone who has been doing what he has been doing.

And just think of how he'll be helping treasury revenues when he has to start taking required minimum distributions!

[A HERETIC I AM]

37. LOL No shit! Check this out...his RMD when he turns 70 will be

(assuming the $42.8 mil makes 8%/year,) when he turns 70 in 2017 he will have to take a minimum of $3,122,532.82 out of a balance of $85,557,398!

Somehow i just don't feel too bad for the guy!

[groovedaddy]

8. Yeah, the original post didn't consider rollovers from other retirement accounts

The $2000 contribution per year is what you can write off on Federal income tax.

[originalpckelly]

2. At the very most it's a minor $42,830,000 discrepancy.

How many years has it been possible for someone over 50 to put in $6,000? How many years has he been over 50 while this rule applied.

It should be possible to nail the discrepancy down.

[BOSSHOG]

3. This year

is the first year for 6K. Romney is 60. The plan is for the max allowed contribution will go up incrementally eventually to be topped off at 10K.

[XOKCowboy]

7. Is there a limit on how much that can be rolled over into an IRA?

This is intriguing.

[groovedaddy]

9. Not that I'm aware of - the only limit is what you can deduct on income tax

[Common Sense Party]

16. No, there isn't a limit on rollover amounts.

Those amounts were all contributed in previous years, and were subject to the contribution limits for the years the contributions were made.

So, a rollover (technically it's a qualified transfer) can be a pretty good chunk of change.

I see several half-million, $1 million+ rollovers from time to time.

[Tierra_y_Libertad]

5. How do I become a Mormon?

[A HERETIC I AM]

28. 1st you have to have special undies

I have a rule about religion (several, really) that goes something like this:

"Never join a religion that requires silly headgear, silly hairstyles or silly clothing. Silly is defined any damned way i choose"

[Tierra_y_Libertad]

33. Aw, shucks. Way too sexy for me...and my wives.

[Common Sense Party]

36. Most of us Mormons don't have that kind of cash.

Only some of us have the undies, but it's not really something we talk about in polite society.

And one wife is plenty for me, thank you very much.

[Dora]

6. IRAs have been around for a while, I think.

It's my understanding that the Roth IRA is a new breed of IRA, and not all IRAs are Roths. That limit on how much you can deposit is applicable to Roths.

Is Romney's IRA a Roth?

[northzax]

12. no, Roth's have different income requirements

both have contribution limits (the difference is that in a traditional IRA, you defer your tax burden until you withdraw money, in a Roth you pay your income taxes up front, but there is no tax on the back end.

[AX10]

14. Roth is 2k.

Regular has no limit.

[antigop]

19. Nope, Roth contribution limits have increased

http://www.quicken.com/cms/viewers/article/taxes/25850

Roth annual contribution limit
2002 through 2004
$3,000

2005 through 2007
$4,000

2008 onward*
$5,000

And if you are over 50, you can do an additional "catch-up contribution.

Effective in 2002, for persons age 50 and over, the law provides an increase in the contribution limits applicable to IRAs as follows:

* From 2002 through 2005: Additional catch-up contribution amount is $500
* From 2006 and forward: Additional catch-up contribution amount is $1,000

[A HERETIC I AM]

22. Not true.

The limit for contributions to a traditional IRA and a Roth IRA are identical. For the 2008 tax year it is $5,000. If you are older than 50, you are allowed an additional $1,000 "Catch-up" contribution. If you have both a Roth and a Traditional, you can only contribute that total between the two of them. You could put four grand in the Roth and the rest in the traditional but you are not allowed to place $5000 in each account.

[BOSSHOG]

18. It was just listed as an IRA

[Common Sense Party]

32. Romney makes way too much to contribute to a Roth. nt

[antigop]

34. Probably a deferred comp plan that was rolled over. n/t

[Common Sense Party]

35. Yes, plus, I imagine he and his advisors have been doing

some creative investing in the IRA.

I doubt he's 100% invested in an S&P 500 index fund.

[northzax]

11. sure, if you got really lucky

if the contribution was $2,000, doesn't mean it had to be in cash, you could fairly contribute $2,000 worth of worthless (that year) stock options. imagine someone at Google who had options to buy 1,000 shares at $20 (not uncommon before the IPO) before they are exercised, they are practically worthless (there is a formula) and could probably all be contributed to the IRA in a single year. that's worth 750,000 now. imagine what a CEO could pull off. of course, Money could have made a mistake in the type of account.

a 401K, for instance, piece of cake. Tiger Woods is believed to have over $100,000,000 in his 401K, and he's only 31.

[Common Sense Party]

13. Investing in IPOs, leveraged transactions, options,

maybe even cattle futures.

All have more risk, but much higher potential return than your average large-cap stock fund.

[antigop]

20. OK, here is part of the answer

From wikipedia:
>>
Romney is a former CEO of Bain & Company, a management consulting firm, and the co-founder of Bain Capital, a private equity investment firm
>>

Part of the money probably came from his 401(k) at Bain & Company.

[BOSSHOG]

25. Thanks again

I did not make the rollover connection. The Bain info was in the MONEY article but no mention of rollover. I guess if I read such magazines I should know a little more.

[antigop]

29. I'm thinking most of it comes from a deferred comp plan. See post #24. n/t

[madinmaryland]

23. Holy Cow Boss! You donating some of that to the LSU football program?

[BOSSHOG]

26. My money goes to that poor college up in Fayetteville

Fayetteville, Arkansas. THE Fayetteville.

[antigop]

27. See post #24 . n/t