Peter Thiel, a cofoundercofounder of Paypal and Silicon Valley mega-investor, has $5 billion in a Roth IRA tax-free. This is according to a ProPublica report. The ongoing investigation uses leaked Internal Revenue Service tax data to investigate how the ultra-rich can avoid paying taxes and maximize wealth.
In a statement released by Bloomberg on Thursday, Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, stated that IRAs are designed to provide retirement security for middle-class families and not allow mega-millionaires or billionaires to avoid taxes. Bloomberg reports that he promised to reconsider his 2016 proposal to cap Roth IRA contributions that exceed $5 million.
The ultra-wealthy have long used retirement accounts to accumulate large sums of cash. Forbes reported in 2012 that Max Levchin (cofoundercofounder of PayPal) sold 3.1 Million shares of Yelp through a Roth IRA and made $10.1 million. More than 300 taxpayers had IRAs with a value of more than $25,000,000 each, or $81 billion. Because Roth IRAs have no taxes and gains can be withdrawn only after the account owner turns 59 1/2, he didn’t have to pay income tax. The Roth IRA account owner can still use the gains to make other investments as long as they are in the Roth IRA account.
