co-founder Peter Thieli Roth’s $ 5 billion individual retirement account balance has led some members of Congress to have a different idea of the tax policy for these investment vehicles.
Richard Neal, a Massachusetts Democrat, who chairs the plenary committee on ways and means, has done so requested a proposal “stop the exploitation of IRAs,” he told ProPublica, which first reported on Thiel’s Roth IRA. ProPublica’s report used tax documents to expose the technical giant ‘s account for less than $ 2,000 in 1999 today to $ 5 billion, thanks in part to investments in private securities.
Neal told the news site that the committee wants to limit “the total amount of money that can be saved in tax-preferred retirement accounts,” he said.
“Our tax code incentives, which help Americans save for retirement, were never meant to provide a super-rich tax shadow,” he told ProPublica in a statement. “We need to end these practices.”
Roth IRAs are financed with after-tax dollars, but the growth and distribution of investments are then tax-free (if they are distributed correctly). Roth IRAs have income restrictions that prevent high-income employees from investing directly in these accounts, but there are other ways around these restrictions, such as investing in a non-deductible traditional IRA and then converting their assets to Roth. Those who do so must pay income tax at the time of the conversion, but then benefit from the tax-free growth and distribution.
Neal is not the only critic of the way Roth IRAs are used.
Chairman of the Senate Finance Committee, Democrat Senator Ron Wyden, has also proposed limiting contributions to Roth IRAs after they reach $ 5 million, Bloomberg reported. He first proposed this rule in 2016, but has since re-examined Thiel’s account balance in the news.
Senator Ben Cardin also supports changes to the system, ProPublica said. The senator “is considering reforms, such as banning the use of IRAs to buy non-government investments,” his spokesman told ProPublica.
Anthony Scaramucci, who was briefly the communications director of the White House during Trump’s administration and is also the founder and co-managing partner of SkyBridge Capital, said a threshold is likely to be set for these accounts. “I think the purpose of this stuff was to help middle-income people, lower-income people a nest egg for their future,” he said. said CNBC.