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Romney's Unorthodox IRA (Glad this is coming out now instead of some "October" Surprise)
Wall Street Journal ^ | January 19, 2012 | Mark Maremont

Posted on 01/20/2012 7:33:07 AM PST by C19fan

Like many Americans, Mitt Romney has an individual retirement account. Unlike most Americans, Mr. Romney has between $20.7 million and $101.6 million in it, a big chunk of his fortune.

Experts on estate planning said it is highly unusual to accumulate such a considerable sum in an IRA, an investment vehicle restricted by annual contribution limits. It appears that Mr. Romney's grew so large mostly because it holds investments in Bain Capital, the private-equity firm he helped start.

Under federal law, Mr. Romney isn't required to pay annual taxes on the account's investment gains, and the bulk of his contributions to the fund are likely to have been pretax dollars, IRA experts say. As such, the Romney IRA has enabled the current Republican front-runner to defer paying taxes on a sizable portion of his wealth—although he could face high tax bills when he eventually withdraws the money.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Politics/Elections
KEYWORDS: ira; romney; tax
Looks perfectly legal but imagine the ads this will provide for Zero and his cronies.
1 posted on 01/20/2012 7:33:11 AM PST by C19fan
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To: C19fan

Romney will pay at the highest applicable individual rate when he pulls out that money. On the other hand he can divide that 401(k) up and allow his chillun’ to inherit it ~ since you can inherit a 401(k).


2 posted on 01/20/2012 7:36:14 AM PST by muawiyah
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To: C19fan

Good for him


3 posted on 01/20/2012 7:41:32 AM PST by italianquaker ( Mr Obama inherited an AAA rating and made it AA, thnx Resident Zero)
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To: muawiyah

So he’s turning capital gains into ordinary income - for either him or his children?

What’s the “scandal” here?

Anyway, good argument for private retirement accounts.


4 posted on 01/20/2012 7:43:52 AM PST by Fido969
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To: muawiyah

So he’s turning capital gains into ordinary income - for either him or his children?

What’s the “scandal” here?

Anyway, good argument for private retirement accounts.


5 posted on 01/20/2012 7:44:32 AM PST by Fido969
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To: Fido969

“Mr. Romney’s reliance on a tax-deferred retirement plan for so much of his wealth could end up costing him. An IRA allows a small immediate tax savings, plus deferral of taxes, he explains. But income from the account, when eventually withdrawn, will be taxed at the higher ordinary-income rate, not the lower capital-gains rate that might have applied if Mr. Romney had held the investments outside the fund.”

As a matter of hindsight considering the growth in the IRA portfolio he may regret having placed the shares in his IRA potentially converting what would otherwise have been a 15% cap gains rate to a higher 35% ordinary income rate when he or his kids withdraw it if they inherit it.


6 posted on 01/20/2012 7:48:37 AM PST by chuckee
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To: Fido969
No, he's taking income from an employer and tossing it into a 401(k) plan sponsored by his employer.

So, who did Mitt work for? Did he follow the IRS rules on allowable contribution amounts? Was he paying personal income tax rates on the OTHER income on which his allowable contribution was based?

We need a tax expert here to tell us how you get a 401(k) built up to the stated amount.

Whatever kind of 401(k) this is it's an extraordinary one.

7 posted on 01/20/2012 7:53:31 AM PST by muawiyah
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To: muawiyah

“Whatever kind of 401(k) this is, it’s and extraordinary one.”

If you go by this definition, then it definitely is.

“Contribution deferral limits

There is a maximum limit on the total yearly employee pre-tax or ROTH salary deferral into the plan. This limit, known as the “402(g) limit”, was $15,500 for the year 2008 and $16,500 for 2009-2011. This has been raised to $17,000 for 2012.[6][7][8] For future years, the limit may be indexed for inflation, increasing in increments of $500. Employees who are 50 years old or over at any time during the year are now allowed additional pre-tax “catch up” contributions of up to $5,000 for 2008 and $5,500 for 2009-2012. The limit for future “catch up” contributions may also be adjusted for inflation in increments of $500. In eligible plans, employees can elect to contribute on a pre-tax basis or as a Roth 401(k) contribution, or a combination of the two, but the total of those two contributions amounts must not exceed the contribution limit in a single calendar year. This limit does not apply to post-tax non-ROTH elections.

If the employee contributes more than the maximum pre-tax/Roth limit to 401(k) accounts in a given year, the excess as well as the deemed earnings for those contributions must be withdrawn or corrected by April 15 of the following year. This violation most commonly occurs when a person switches employers mid-year and the latest employer does not know to enforce the contribution limits on behalf of their employee. If this violation is noticed too late, the employee will not only be required to pay tax on the excess contribution amount the year was earned, the tax will effectively be doubled as the late corrective distribution is required to be reported again as income along with the earnings on such excess in the year the late correction is made.

Plans which are set up under section 401(k) can also have employer contributions that cannot exceed other regulatory limits. Employer matching contributions can be made on behalf of designated Roth contributions, but the employer match must be made on a pre-tax basis.[9]

Some plans also have a profit-sharing provision where employers make additional contributions to the account and may or may not require matching contributions by the employee. These additional contribution may or may not require a matching employee contribution to earn them. These profit-sharing contributions plus the matching contributions both cannot exceed 25% of the employee’s pre-tax compensation. As with the matching funds, these contributions are also made on a pre-tax basis.

There is also a maximum 401k contribution limit that applies to all employee and employer 401k contributions in a calendar year. This limit is the section 415 limit, which is the lesser of 100% of the employee’s total pre-tax compensation or $44,000 for 2006, $45,000 for 2007, $46,000 for 2008, $49,000 for 2009 through 2011, and $50,000 for 2012. For employees over 50, the catch-up contribution limit is also added to the 415 limit.

Governmental employers in the US (that is, federal, state, county, and city governments) are currently barred from offering 401(k) plans unless they were established before May 1986. Governmental organizations instead can set up a section 457(b).”


8 posted on 01/20/2012 8:00:06 AM PST by Bigh4u2 (Denial is the first requirement to be a liberal)
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To: muawiyah
We need a tax expert here to tell us how you get a 401(k) built up to the stated amount.

Over the years there have been plenty of kinds of pension plans, it didn't necessarily have to be a 401(k). If he put some stock options or company stock into the plan years ago it could have grown to the amount that was decribed. Then when he leaves the company he just rolls his pension into an IRS account, which is what you usually do when you leave a company.

9 posted on 01/20/2012 8:37:35 AM PST by Fido969
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To: Fido969

IRA account, not “IRS account.”

lol.


10 posted on 01/20/2012 8:39:20 AM PST by Fido969
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To: C19fan

If we’re going to play this envy game, Obama has fundraisers at $35,000 per plate.


11 posted on 01/20/2012 8:41:26 AM PST by Conservativegreatgrandma
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Hey...if Mittens held someone up at gunpoint or killed to get this money, let me know. Otherwise...

...yawn.


12 posted on 01/20/2012 8:48:36 AM PST by moovova (Report my sarcastic, fear-mongering, hate-filled lies to www.AttackWatch.com by clicking HERE.)
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To: C19fan

Funny, I don’t recall of this fuss being made over John Kerry’s fortune which vastly bigger than Romney’s


13 posted on 01/20/2012 9:03:02 AM PST by Cousin It
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To: C19fan

How old is Mitt right now?


14 posted on 01/20/2012 9:47:26 AM PST by ridesthemiles
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To: C19fan
I don't care how rich he is as long as he got there legally.

I'd like to be rich someday too.

I do hope, however, that by 'October Surprise' time...he's not our candidate.

15 posted on 01/20/2012 10:27:11 AM PST by Washi (Surviving the Zombie Apocalypse, one head-shot at a time.)
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16 posted on 01/20/2012 11:48:06 AM PST by TheOldLady (FReepmail me to get ON or OFF the ZOT LIGHTNING ping list)
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To: Fido969
You don't know what you are talking about.

It is illegal to put into a retirement account of any type capital gains. Moneys entered into a retirement account has to come from earned income from labor (nothing else).

Once the money is in a retirement account you can invest it, but ONLY in IRS approved investments.

The main reason that Romney is so hesitant when discussing his taxes is probably not his 1040 forms. What really worries him is probably doing some gray or illegal staff to get to an amount of 20-100Millions in his retirement accounts.

There are severe restrictions on how much can be put into a retirement accounts, there is also a limit on the total yearly amount that can be put into retirement (all types summed up Benefit plans, defined benefit plans...)

Taking such things into account it looks fishy that he was able to accumulate 20-100M $ in his account.

17 posted on 01/24/2012 7:48:00 PM PST by baluga
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To: baluga
It is illegal to put into a retirement account of any type capital gains. Moneys entered into a retirement account has to come from earned income from labor (nothing else).

Blah Blah. But the INVESTMENTS in the account can be capital gain items. You can put COMPANY STOCK into your 401(k) plan as a type of deferred compensation.

18 posted on 01/25/2012 6:57:06 AM PST by Fido969
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To: Fido969
You don't know what you are talking about.
Stocks can be put in, to the limits set by IRS, and have to be put in at their MARKET VALUE.

I am doubtful that if he used company stock they were put in at their true market value, this is precisely what I mean by Gray area

Your blah blah does not add anything to the discussion and if you are ignorant about the subject matter, please stay home and don't try to add smoke so that others Will not see what are the true issues.

19 posted on 01/25/2012 8:28:02 AM PST by baluga
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To: baluga
Stocks can be put in, to the limits set by IRS, and have to be put in at their MARKET VALUE.

Very good.

And what happens when the market value goes UP after they are put in?

20 posted on 01/25/2012 3:04:49 PM PST by Fido969
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