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The 196 million dollar Roth
11-21-2014, 02:21 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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The 196 million dollar Roth
I thought I was doing pretty well the combined value of my 401K/IRAs moving past 1.5 million, despite only contributing for 15 years.
Then came Gov. Romney with an IRA worth more than $100 million that he accumulated over a life time.
But my hats is off to this entrepreneur.
Quote:
In the first example, an entrepreneur contributed $5,000 of “founders’ shares” in a business to a Roth IRA in 2008. The original value of the shares was $0.00125 each. The company went public in 2012 at $25 a share. The account grew to $196 million by 2014.
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From the WSJ.
I say if he uses the 72(t) to do withdraws before 59.5 and can qualify for an ACA subsidy, he should be crowned the Olympic champion of tax avoidance.
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11-21-2014, 02:26 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
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But the fact remains that you are indeed doing quite well. Check your yardstick.
__________________
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"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
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11-21-2014, 06:21 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,374
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Very smart play. $196 million tax-free. That guy is my hero.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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11-21-2014, 06:25 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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Quote:
an entrepreneur contributed $5,000 of “founders’ shares” in a business to a Roth IRA in 2008.
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That is the problem with allowing non-publicly traded stocks to be allowed in an IRA. There is no way of knowing what the actual value is. If anyone could have purchased the shares at the same price, I would bet the price would be higher.
I doubt the company actually grew that much, it was already worth that. But that kind of thing happens all the time.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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11-21-2014, 07:55 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,903
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Quote:
Originally Posted by Senator
That is the problem with allowing non-publicly traded stocks to be allowed in an IRA. There is no way of knowing what the actual value is. If anyone could have purchased the shares at the same price, I would bet the price would be higher.
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Very true. If arbitrary valuations are allowed, all sorts of games are possible. For example, you start a corporation and I start a different one. We each put founders' shares in our respective Roth IRAs. A little later, I buy your shares for $X million and you buy my shares for the same amount, and suddenly both of us have large Roth IRAs. Expect this loophole to be closed before long.
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11-21-2014, 07:58 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by heeyy_joe
But the fact remains that you are indeed doing quite well. Check your yardstick.
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I feel a lot better about myself using my yardstick in comparison to my friends. Mr. Romney's yardstick makes me feel like a loser.... Richer, smarter, tremendous head of hair, and generally just an all around better person than me.
Sent from my iPad using Tapatalk
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11-21-2014, 08:05 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,506
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Probably is Max Levchin. In March 2012, he apparently retained 3.9 million shares of Yelp in his Roth. The valuation at that time was $22 per share, and this morning is north of $58 (although if he sold in the 90s earlier this year). See How A Serial Entrepreneur Built A $95 Million Tax Free Roth IRA - Forbes
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OMY * 3 2ish Done 7.28.17
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11-21-2014, 08:09 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Looks like a massively under valued initial corruption corporation stock
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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11-21-2014, 08:17 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Mulligan
I feel a lot better about myself using my yardstick in comparison to my friends. Mr. Romney's yardstick makes me feel like a loser.... Richer, smarter, tremendous head of hair, and generally just an all around better person than me.
Sent from my iPad using Tapatalk
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I have a different yardstick, mine is (or was) Tony Benn
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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11-21-2014, 08:17 AM
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#10
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Full time employment: Posting here.
Join Date: Aug 2014
Posts: 584
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I thought you couldn't contribute anything other than cash to an IRA? Did he do some sort of sale and then purchase within the IRA? What are the mechanics of this?
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11-21-2014, 08:22 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,903
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Quote:
Originally Posted by ArkTinkerer
I thought you couldn't contribute anything other than cash to an IRA? Did he do some sort of sale and then purchase within the IRA? What are the mechanics of this?
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I believe dollars already in the Roth IRA are used to purchase founders' shares.
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11-21-2014, 08:29 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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11-21-2014, 09:02 AM
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#13
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gone traveling
Join Date: Sep 2013
Posts: 1,248
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Quote:
Originally Posted by pb4uski
Very smart play. $196 million tax-free. That guy is my hero.
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I would call him crook.....but it is all legal.
When a "hero" like him effectively steals money from tax collections.....another guy like you must plug that missing hole
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11-21-2014, 09:12 AM
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#14
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Full time employment: Posting here.
Join Date: Aug 2014
Posts: 584
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I think the ability to over contribute to your 401K and then shift it to the Roth is rather sleazy. That said, if the option were available to me I would have taken it!
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11-21-2014, 09:16 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,506
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Quote:
Originally Posted by eta2020
I would call him crook.....but it is all legal.
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We don't know enough to determine that (nor should anyone outside the taxpayer and IRS). The initial valuation was purportedly 1/8 of a cent per share. If so, depending upon timing, there may be valuation issues under current law--subject to limitations periods....
Don't think that the systems are in place to really police this though....
(edited for clarity)
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OMY * 3 2ish Done 7.28.17
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11-21-2014, 09:37 AM
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#16
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gone traveling
Join Date: Sep 2013
Posts: 1,248
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Quote:
Originally Posted by ArkTinkerer
I think the ability to over contribute to your 401K and then shift it to the Roth is rather sleazy. That said, if the option were available to me I would have taken it!
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Agreed....But being sleaze ball is not a good quality for certain jobs
I know, no politics. I will be quite from now on.
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11-21-2014, 09:47 AM
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#17
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Recycles dryer sheets
Join Date: Dec 2013
Posts: 390
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Classic case of "Can't see the forest for the trees" ploy. The populace then focuses on the outlier, to determine this is not right.
The spindly 1.5 M trees are the ones that end up being pruned.
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11-21-2014, 10:18 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Aug 2006
Posts: 1,558
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The man lied about the value of his pre-ipo stock in order to get around the contribution limits to an IRA.
A just system would have him forced to withdraw this amount from his IRA, pay the taxes and penalties, and serve 6 months in prison for tax fraud.
We have different ideas of what makes a hero.
Quote:
Originally Posted by pb4uski
Very smart play. $196 million tax-free. That guy is my hero.
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11-21-2014, 10:26 AM
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#19
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Full time employment: Posting here.
Join Date: Aug 2014
Posts: 584
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Quote:
Originally Posted by Hamlet
The man lied about the value of his pre-ipo stock in order to get around the contribution limits to an IRA.
A just system would have him forced to withdraw this amount from his IRA, pay the taxes and penalties, and serve 6 months in prison for tax fraud.
We have different ideas of what makes a hero.
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Depends on when he made the purchase of the shares. If this was done before the company had any assets or real value it would be legitimate--at least to my way of thinking. If he did it after the company was on its feet and earning (or was well on its way to earning) vast sums then yes, I agree with you.
I think this would be a good way to pursue ventures after FI. The only risk he took was that losses can't be carried outside the IRA. For the type of ventures he pursued--primarily other people's money--it was a very wise move.
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