Romney's $101 Million 401k

The point of this is that Romney somehow has about 1,000 times what an honest citizen would have in his tax free IRA. How did he get so much money in there when the yearly contribution limits are $6000?

I can't say exactly how he did it, because only Romney or his accountants would know what investments he made and his gains. But it's not unrealistic for someone who is an extremely good investor, perhaps like Romney. Particularly when you know he ran one of the most successful private equity firms of that time period.

There is such a thing as a self directed IRA. What I suspect happened, is that he had his IRA with a custodian that allowed for direct investment. Then he used his IRA to invest in Bain Capital as start-up funds. Remember, Private Equity firms REQUIRE their principals and managing directors to be co-invested in their own funds with their personal money. That way they are aligned with the investors in their funds. If the fund does well, they all profit. If it fails, both the managers of the fund and it's investors lose. And we all know that Bain was fabulously profitable.

Wealthy people tend to bet on themselves, and it is a good bet because they are driven to succeed, in most cases.

The other possibility here, not knowing much about Romney's IRA, is that it is a rollover from his Bain 401k plan. If Bain had profit sharing that they invested in their employees 401k accounts, or invested the 401k amounts into the Bain funds, it again, could also explain how he accrued such a large amount in his IRA.

What you are getting confused with, Couga, is thinking that Romney is Joe Average. Joe Average being the beer drinking, Dancing with the Stars watching slob, who invests $3k a year into a plan that puts money into crappy mutual funds that never go up. Romney isnt' that guy. But good news for you and for Joe Average: Anyone can open a self-directed IRA. And you too can invest in alternative assets rather than crappy mutual funds. But it takes time and effort.

I have a friend who uses his self-directed IRA to invest in tax lien certificates, he makes 25% annually. I have another friend that uses his self-directed IRA to invest in stuff like privately owned rock quarries. And another who uses it to flip houses.

Source: http://www.motownsports.com/forums/political-discussions/98594-romneys-101-million-401k.html

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