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Millions in Self-Directed Roth IRA?
03-21-2012, 08:42 AM
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#1
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Recycles dryer sheets
Join Date: Apr 2008
Posts: 223
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Millions in Self-Directed Roth IRA?
Self help - The Daily
I am missing something in this article, I thought that there were strict limits (around $5000) on yearly contributions to a Roth IRA? How are these individuals able to get millions of dollars in it?
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03-21-2012, 08:48 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,204
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Quote:
Originally Posted by inquisitive
Self help - The Daily
I am missing something in this article, I thought that there were strict limits (around $5000) on yearly contributions to a Roth IRA? How are these individuals able to get millions of dollars in it?
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I think your answer was in the article, though mentioned somewhat in passing.
Quote:
U.S. citizens can contribute up to $5,000 of after-tax money to a Roth IRA with the advantage of paying no taxes on gains thereafter, though contributions are limited and eventually capped for those earning more than $107,000 a year. Investors can also roll over 401(k) funds into their Roth accounts.
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Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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03-21-2012, 09:03 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Mar 2007
Posts: 1,854
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I did a little research on SDIRAs a couple years ago. There are many complex rules about them, and the opportunity to "goof up" and end up in a legal mess is quite high IMO. They are suitable for those with enough money to pay a trustee to watch every detail about them, hire lawyers to help structure them, and have a specific business purpose for which they exist. I don't have that big of a balance, and the risks outweighed the benefits for me.
Self-Directed IRA - Wikipedia, the free encyclopedia
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03-21-2012, 10:05 AM
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#4
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Recycles dryer sheets
Join Date: Oct 2011
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If someone converted a Traditional/Rollover IRA to a ROTH, they could have a high dollar value.
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03-21-2012, 10:23 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,877
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Looks like the high IRA values come from gains. Anyone can do the same, provided you have a great crystal ball and put your IRA funds into the right stock at the right time.
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03-21-2012, 10:30 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 2008
Location: No fixed abode
Posts: 8,764
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My impression of these situations is that there is significant insider trading and information involved. Obviously nobody working under normal conditions could accumulate millions in an account limited to a $5K yearly contribution. But if you can manage 1000% returns on special deals, you can build it up pretty fast. The only people who manage this are big name entrepreneurs, financial whizzes, and presidential candidates. I'll be happy if I end up with a couple hundred K in mine. Actually, if I can live another 30 or 40 years I might be able to pass the million mark, but then those folk will be in the billions. Que sera, sera. At least I'm retired.
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03-21-2012, 10:53 AM
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#7
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Full time employment: Posting here.
Join Date: Nov 2010
Posts: 628
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Quote:
Originally Posted by KiraC
If someone converted a Traditional/Rollover IRA to a ROTH, they could have a high dollar value.
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Two blue collar working families that I know of have over half a million each. Their work made them late to the 401K party, too.
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03-21-2012, 12:16 PM
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#8
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Recycles dryer sheets
Join Date: Oct 2011
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The max yearly SEP IRA contribution is, I think, $50,000. Contribute that for a few decades, get decent returns, convert to a Roth, and you're looking at several million in a Roth IRA.
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03-21-2012, 12:39 PM
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#9
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Join Date: Apr 2010
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I have about $350K in IRAs/401(k)s and I am not quite 40. Without any extra-ordinary gains I could have "millions" in an IRA in a couple decades. Maybe sooner.
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03-21-2012, 01:02 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Mar 2007
Posts: 1,854
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I think the key here, or at least one of them, is the term "self directed". The rules around these are quite different.
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"Live every day as if it were your last, and one day you'll be right" - unknown
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