Millions in Self-Directed Roth IRA?

[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?

 

[Midpack]

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?

I think your answer was in the article, though mentioned somewhat in passing.

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.

 

[Finance Dave]

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

 

[KiraC]

If someone converted a Traditional/Rollover IRA to a ROTH, they could have a high dollar value.

 

[GrayHare]

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.

 

[harley]

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.

 

[devans0]

If someone converted a Traditional/Rollover IRA to a ROTH, they could have a high dollar value.

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.

 

[sunsnow]

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.

 

[Sesq]

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.

 

[Finance Dave]

I think the key here, or at least one of them, is the term "self directed". The rules around these are quite different.