4 ms·

Not the first but there’s not a ton of people who can squirrel away $5B in a Roth IRA, so likely the most egregious.

by prpl 5y ago

nostrademons 5y ago
They're not squirreling away $5B in a Roth IRA, they're squirreling away $2000 and putting it in an asset whose value grows from $2000 -> $5B. In theory someone who put Dogecoin in their Roth IRA in 2014 could do the same. It would make sense to limit Roth IRAs to publicly-traded assets. If you're investing in securities that you need to be an "accredited investor" for (> $1M liquid net worth), that's not really a tool for the middle class.
- lotsofpulp 5y ago
  It would make more sense to get rid of all deductions/credits/exemptions, so that there would be no unintended consequences.
- ajmurmann 5y ago
  The harm here isn't that he invested in startups, but that it's become such an insanely high profit that's now entirely shielded from taxes. What would preventing startup investments accomplish that a simple cap on shielded gains (let's say 10 or 20 million) wouldn't?
  - NonEUCitizen 5y ago
    What is the harm?
- deleted 5y ago
  [deleted]
- megaman821 5y ago
  All the money coming into the Roth IRA is post tax money, whether it was cash or IRA conversion. Once in the Roth IRA, you can sell for a profit and rebuy different stocks without paying tax on that profit. Outside the Roth IRA selling for a profit would be a taxable event. Trading stale stocks for fresh new winners without paying the tax inbetween is an incredible advantage to growing your wealth.
  - nostrademons 5y ago
    That's the intended benefit of Roth IRAs though, even for middle-class investors. That you can buy & sell within them without paying capital gains tax. It's not usually a huge problem in the public markets because they're extremely liquid, with generally symmetric information across all participants, and that liquidity makes it hard to generate extremely excessive investment returns except by luck. But private companies are illiquid, oftentimes with huge asymmetries of information, and that lets you generate 10,000%+ investment gains by happening to have an opportunity to invest in a rocket ship that other people can't get into.

Not the first but there’s not a ton of people who can squirrel away $5B in a Roth IRA, so likely the most egregious.

by prpl 5y ago

Not the first but there’s not a ton of people who can squirrel away $5B in a Roth IRA, so likely the most egregious.

They're not squirreling away $5B in a Roth IRA, they're squirreling away $2000 and putting it in an asset whose value grows from $2000 -> $5B. In theory someone who put Dogecoin in their Roth IRA in 2014 could do the same. It would make sense to limit Roth IRAs to publicly-traded assets. If you're investing in securities that you need to be an "accredited investor" for (> $1M liquid net worth), that's not really a tool for the middle class.

lotsofpulp 5y ago
It would make more sense to get rid of all deductions/credits/exemptions, so that there would be no unintended consequences.
ajmurmann 5y ago
The harm here isn't that he invested in startups, but that it's become such an insanely high profit that's now entirely shielded from taxes. What would preventing startup investments accomplish that a simple cap on shielded gains (let's say 10 or 20 million) wouldn't?
- NonEUCitizen 5y ago
  What is the harm?
deleted 5y ago
[deleted]
megaman821 5y ago
All the money coming into the Roth IRA is post tax money, whether it was cash or IRA conversion. Once in the Roth IRA, you can sell for a profit and rebuy different stocks without paying tax on that profit. Outside the Roth IRA selling for a profit would be a taxable event. Trading stale stocks for fresh new winners without paying the tax inbetween is an incredible advantage to growing your wealth.
- nostrademons 5y ago
  That's the intended benefit of Roth IRAs though, even for middle-class investors. That you can buy & sell within them without paying capital gains tax. It's not usually a huge problem in the public markets because they're extremely liquid, with generally symmetric information across all participants, and that liquidity makes it hard to generate extremely excessive investment returns except by luck. But private companies are illiquid, oftentimes with huge asymmetries of information, and that lets you generate 10,000%+ investment gains by happening to have an opportunity to invest in a rocket ship that other people can't get into.