How Billionaires Use Special IRAs to Avoid Millions in Taxes

If you haven’t begun saving for retirement, you should start today. Your future depends on it.

And how much money you have does not matter as much as how you save and spend it. What matters most is strategically saving as early as possible for your future retirement.

It doesn’t matter how much money make now. What matters is how much money you can start regularly saving now. And brainstorming how to make extra income as possible.

And if you have an employer that offers a retirement plan, you can easily start saving for retirement. Many employers offer 401 (k)s, IRAs, the lesser-known self-directed Roth IRAs, and other retirement account opportunities.

But many Americans either don’t know to ask or just don’t take advantage of the opportunity.

Do you know who appreciates the benefits of retirement accounts? Billionaires.

And this is not a report on billionaires gaming the system — anyone can do this.

Tax deferral

You may not know the name Peter Theil, but you probably use some of his contributions to society every day.

Peter Theil is one of the cofounders of PayPal, along with Elon Musk. Thiel was the first outside investor to invest in Facebook and one of the initial investors of Air BnB.

He is a self-made billionaire venture capitalist, philanthropist, and tech mogul who is worth at least $4 billion.

And Theil has a self-directed Roth IRA retirement account that is worth over $5 billion.

Theil didn’t game the system or do anything illegal. He saw the value in investing in a retirement account in 1999, when his self-directed Roth IRA was only worth $2,000.

The average Roth IRA account in 2018 was only worth $39,000.

For context, it is important to note that PayPal was launched in 1998, long before Theil became a self-made billionaire.

With a traditional 401 (k) retirement account, employees get a tax break as they make contributions. But they must pay taxes with each qualified withdrawal after retirement.

Roth accounts don’t have tax-deferred contributions. But post-retirement withdrawals are tax-free on the federal level as long as you age 59 ½ or over

Payoff

And there are several kinds of retirement accounts. Theil opened a self-directed Roth IRA account which allows people to shelter alternative investments in their retirement accounts. In this case, Theil invested in stock shares for private companies and in real estate.

Fast forward 20 years and that $2,000 self-directed Roth IRA opened in 1999 is now worth $2 billion.

Roth IRA contributions are not tax deductible, but for Theil the payoff came 20 years later.

And this isn’t a quirk that only billionaires can take advantage of. Anyone can do what Thiel did.

Talk to your employer and take advantage of all retirement account opportunities available to you.

Recommended Articles

Biggest and Smallest National Gaps Between Rich and Poor (and Where America Ranks)

In the United States, the richest 1% controlled more than 40% of the wealth in 2016. The last time wealth inequality gaps were this wide was during the Great Depression.

3 Best Travel Websites That Save You Money

There’s a lot of travel sites out there and they all seem very similar. If you are planning for spring break in 2022, next year’s summer vacation or just getting

35 Healthy, Natural Foods You Should Be Eating

Did you know that the healthiest foods in the world are actually highly affordable, simple foods that can be found in any supermarket? The most healthy foods you should be

5 Ways to Boost Return in Your Investments While Actually Cutting Risk

Are you looking for ways to earn higher returns without risking it all? When it comes to investing your money today, there are plenty of options that promise attractive returns.

4 Effective, Easy Retirement Withdrawal Strategies

Many many years ago when my dad retired I remember him receiving a gold watch for his years of service and a nice pension for his hard work. Today, many

4 Strategies for Getting a Healthy Midday Nap

What is the best way to reduce feelings of frustration and stress? Yoga, meditation, listening to quiet music? While all of these can have a positive effect on stress levels,

Billionaires Commissioning Gold, Bejeweled Credit Cards Worth $50K

That may be because there are now more rich people in the United States than ever before. What changing is what they are willing to spend money on — such

When is the right time to retire? 62, 65, 70?

You may be trying to figure out what the most beneficial age is to say goodbye to your colleagues at work. Is it 62, 65, or even 70? Age 65

The Future of Medicine: 3D Printing

The technology of 3D printing is a technique that creates 3D objects from digital designs right before your eyes. Typically, 3D printers work with plastic or other malleable materials to

5 Special Risks Women Should Consider When Planning for Retirement

Even though the country is moving toward erasing the gender boundaries, there are some things where women and men have to acknowledge they are different. Retirement planning is one of

Depression Maybe a Side Effect of Diet, Lifestyle: Study

A study has recently been released that indicates that depression may be more closely related to an illness or allergic reaction than a mental condition. Numerous scientists have spent the

7 Steps to Enter Retire Early and Rich

The United States is home to over 20 million millionaires, about 80% of whom are self-made millionaires who worked and invested their way into the seven-figure club. Wouldn’t it be