Romney's IRA

By some estimates he’s got about 100 mil in this bad bod. Can anyone explain how one can they get such a large amount in these fund given the strict contribution limits? Also, what are the benefits…do they really think they’ll be a lower rate at retirement? Is it to avoid short term cap gains?

401(k), not IRA

The rich get richer! I can’t wait until my man Obama pounds his gavel demanding reform on these rich white folks! 401ks are tax deferred instruments, what a loophole! It’s people like him that make us po black folks live in poverty.


Really though. I worry about my Roth due to this reason. Some left winged zip will make a laddered tax on gains above some set high watermark. If he put away $100m in his 401k/IRA/Savings Account, good for him! To me that demonstrates fiscal prudence, which is needed at 1600 Pennsylvania.

He probably got paid with severely undervalued private shares through his PE business. And then, eventually, the shares exploded from like $10 to $10,000.

Just a good way to lower your taxable income for the year. In Romney’s case it’s peanuts though. I’m sure he couldn’t care less about the future tax liability.

Yes. At the time though, he was probably not a $500 million person, so his decision process would have been different from what it would be today.

I wasn’t really paying attention to the size of the account. You’re probably right that he received some company stock and it went parabolic.

the real money is made on company options in a good company…check out the 10k filings of your p/e firms and you’ll likely see options handed over like its nothing…

Hmm. That’s a good point. If they pay in options, it’s easy to get crazy leverage. The thing is, how do they value options on private stock? There is no market, so they have to just make something up - my guess is that they assign a very low value to the options to underreport partner compensation.

Are you allowed to have options in a tax-deffered or tax-free retirement account? I forget the language on this.

You can trade options in retirement accounts, although there might be some restrictions based on the type of option combination or type of account. Also, it is possible to embed options into some kind of structure that is not an option on paper - like warrants or something. Not sure what sort of rules would apply in these cases.

That’s right, now I remember. Tax advantaged retirement accounts are not allowed to use margin. Therefore you can be long puts and calls, but you can’t be short anything, because that requires margining.

I know for sure that you can short calls if you own the stock (i.e. covered calls). I suppose you don’t need to post margin if you own the underlying security.

Yeah, I remember reading they said that Bain allowed employees to hold shares in their PE deals in their retirement accounts.

I also think I remember (maybe the compaign themself) saying having that much in an IRA/401k is not desirable. Had he held it in a taxable account, it would have been LT cap gain, now it’ll be ordinary income.

Hmm… I’m embarrased that I don’t already know this.

i was at an investor conference for a PE firm…i felt very poor afterwards…its a matter of time before kim kardashian stops dating atheletes and goes for the PE guys…

I do it every day. Value the underlying stock and then slap B-S on the options (assuming they’re vanilla). Easy Peasy Lemon Squeezy.

I’m probably the only fit black well endowed close enough to PE guy that Kim can get. She don’t want no white or asian tiny dong.

He obviously either stuck these positions in at ridiculously undervalued prices or found a loophole to get around the max annual contribution. My question is what is that loophole? I would also like to put more than 17k a year into my 401k.