SGH Wealth Management: What I'm Reading

Retirement Rules Never Stay the Same

SGH Wealth Management’s “Read What I’m Reading” Nov. 2021 | Nov. 5th, 2021

When reports surfaced that PayPal founder and billionaire Peter Thiel had invested his Roth IRA in private equity and private stock in his own company, and managed to turn an account worth less than $2,000 in 1999 into a $5 billion nest egg free from taxes, it caught the attention of Congress.  Thiel will never have to pay the government a penny in taxes on his investment windfall.

That will no longer be possible if the recent House Ways & Means Committee bill becomes law.  It specifies that, going forward, IRAs and Roths will only be allowed to invest in publicly traded securities, and it prohibits these accounts from owning private equity, hedge funds and other investments that are only available to certain wealthy insiders.  Current owners would be required to sell these exotic holdings within two years, and use the proceeds to buy a public, SEC-registered investment.

The bill would go a long step further and require people who are lucky enough to have over $10 million in a traditional or Roth IRA from making any further contributions, and impose new required minimum distributions on those accounts.  Anyone with over $400,000 in taxable income and over $10 million in a traditional or Roth IRA at year’s end would have to withdraw at least half of the excess the next year.  The goal is to create a cap of $10 million on all retirement accounts that escape annual taxation going forward and cut out the tax-free corporation from the U.S. economic landscape.

Mark your Calendars for Thurs December 2nd @ 3pm when the Detroit Economic Club will host Sam Huszczo, CFA, CFP as a speaker for their virtual Money Talks event, seen in the 1st link below:



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