f/u Mitt's Taxes... $100M IRA

[mominatrix]

oooooooooh.
===============


TPMDC
Dem Lawmakers Want Answers About Romney’s Enormous IRA
Mitt Romney

Brian Beutler August 3, 2012, 8:26 AM 46223

Leading House Democrats want to turn Mitt Romney’s enormous IRA into more than just a political problem.

Romney’s most recent financial disclosure form revealed that his tax-deferred individual retirement account holds upwards of $100 million — an amount that awkwardly showcases his enormous wealth but also raises legal and ethical questions.

IRAs are intended to allow workers to put away modest sums of money each year in order to help finance a middle class retirement. The savings are tax deferred, but there’s a legal limit — now $6,000 — on how much each IRA holder can contribute annually.


Now top Democrats on the Budget, Ways and Means, and Education and Workforce Committees want to know how people of Romney’s wealth can end up with 100,000 times that much money in a single IRA, and how much the tax and investment strategies they employ cost the Treasury in revenue every year.

In a letter Thursday to senior officials at the Treasury and Labor departments, Reps. George Miller (D-CA), Sander Levin (D-MI), and Chris Van Hollen (D-MD) want to know: Is this legal? How easy is this strategy to get away with? How much does it cost the government every year? And what can be done to end the practice?

“[W]e are alarmed to learn that wealthy taxpayers may be taking advantage of a tax subsidy that is designed to provide for retirement to instead accumulate massive amounts of tax-sheltered assets,” the lawmakers write. “Given your commitment to the rule of law and equitable treatment of taxpayers, we hope that you will evaluate this issue carefully to ensure that a select few are not being provided with a loophole that allows for wrongful tax evasion.”

The lawmakers’ inquiry has a substantive, policy basis — but the politically charged question is also a shot across Romney’s bow.

“[R]ecent news reports indicate that Bain Capital allowed service partners and employees to co-invest in investment deals via tax-preferred retirement accounts … in some cases providing one-fourth of the total capital in the investment deals,” the lawmakers write.

They go on to speculate about how it worked.

“Some experts have expressed the view that the investments made through these accounts and plans may have been assigned a nominal value that was significantly lower than the fair market value of the investments, perhaps using a liquidation value methodology. In particular, this strategy has been cited as one explanation for how presidential candidate Mitt Romney’s IRA is valued at between $20 and $101 million despite the annual contribution limits that apply to tax-preferred retirement accounts and plans.”

To translate, Romney could have skirted the annual contribution limit if his IRA invested heavily in Bain projects by dramatically lowballing the value of the stakes.

If the administration is forthcoming — and why wouldn’t it be? — its answers to these questions will be general, not about Romney specifically. But those answers will broadly apply to Romney and his IRA, and could bring some clarity to one technique people of Romney’s wealth can use to amass even more.

You can read the entire letter below.


tpmdc.talkingpointsmemo.com/2012/08/mitt-romney-ira-taxes-retirement.php?ref=fpblg

[JLN]

Well that's certainly reason enough to not provide his tax returns. That's some major use of tax loopholes that pretty disturbing, IMO.

[Deleted]

I question his valuation of whatever asset he put into the IRA at the time. I suspect he put something like penny stock in knowing it was going to take off.

[Deleted]

Aug 5, 2012 6:33:38 GMT -5 @septimus said:

I question his valuation of whatever asset he put into the IRA at the time. I suspect he put something like penny stock in knowing it was going to take off.

I wondered if that's how he hit it to.
We have a tfsa here (tax free savings account) you can put 5k into per year. So my account should only have 20k in it, but it has 30k because my investments in it have done well.

That being said, I'm not sure how I could get 100m in them in 40 years, when my goal is 2m if I do well.

[kadams767]

Nm

[chichimi]

Its really not that much when you consider the rising costs of healthcare which in this case is just spare robot parts.

[ttt]

Aug 5, 2012 14:24:30 GMT -5 @chichimi said:

Its really not that much when you consider the rising costs of healthcare which in this case is just spare robot parts.

I am completely confused.

[Meganne]

It is always possible he rolled over a 401K to his IRA. A qualified rollover would not be limited to the $5000 or $6000 annual limitation.

[copzgirl1171]

Why has this been so quiet?

[copzgirl1171]

Aug 6, 2012 10:12:11 GMT -5 asdfjkl said:

Aug 6, 2012 10:03:35 GMT -5 @copzgirl1171 said:

Why has this been so quiet?

Because Americans wouldn't understand its significance.

We need there to be a dick sucked or birth certificate missing.

Just like you SBP to bring Richard Nixon into this fight. God, let.it.go.

[copzgirl1171]

Tell me you got my joke SBP.

I feel like Carrot Top right about now.

[KateAggie]

If he's rolled over multiple 401Ks (since he hasn't worked at the same company for 20+ years), he's not held to x amount a year. Rollovers have no limits as far as amount.

Copz, I avoided this thread because it's likely to go nowhere, at least without more information. Right now, it's just guessing the circumstances...and lord knows I'm going to assume it's legit, and y'all aren't.

[sweettooth]

Wouldn't this be a good thing for him to explain? Why wouldn't he want to so that there wouldn't be so much speculation?

[copzgirl1171]

Aug 6, 2012 10:33:49 GMT -5 KateAggie said:

If he's rolled over multiple 401Ks (since he hasn't worked at the same company for 20+ years), he's not held to x amount a year. Rollovers have no limits as far as amount.

Copz, I avoided this thread because it's likely to go nowhere, at least without more information. Right now, it's just guessing the circumstances...and lord knows I'm going to assume it's legit, and y'all aren't.

I would genuinely like to hear the explanation. Legit or otherwise.

[MrsDL]

Wouldn't this be more evidence that the tax code needs to be completely over-hauled? Tax "loop-holes" are not illegal. That said, dumb bastard should have used Turbo Tax. Then when they find out you didn't pay taxes you get a pass.

[Michelle]

Aug 6, 2012 10:33:49 GMT -5 KateAggie said:

lord knows I'm going to assume it's legit, and y'all aren't.

I chuckled at this. And then I saw the SNL Gibbs brothers (again) and laughed out loud. They just add a certain something to punctuating your comments, KA.

As for Mittens, I don't have anything intelligent to add until we find out more information. It definitely is curiouser and curiouser.

[heliocentric]

I found this:


Question: Do employer contributions to a 401(k) plan count against the maximum limits you can contribute to the plan? Do they affect the amount you can put into a traditional or Roth IRA?


Answer: The employer matching contributions don't count toward the maximum limits you can contribute to a 401(k) plan.

In 2012, the contribution limit is $17,000 for employees. For plans that favor highly compensated employees, the limitation is $110,000. A highly compensated employee includes officers of the company, certain major shareholders, employees who are highly compensated "based on the facts and circumstances," and spouses or dependents of those above.

Your plan administrator can provide additional information about highly compensated employee limits if you fall into that category.

Catch-up contributions of up to an additional $5,500 are allowed for employees ages 50 and older.

Still, your participation in a 401(k) plan may limit your ability to make tax-deferred contributions to a traditional IRA, although you can make nondeductible contributions if you have sufficient taxable compensation to do so. As I point out in another letter, there are income limitations on contributing to a Roth IRA, but no income limitations on converting a traditional IRA to a Roth IRA.



Read more: Employer Match Counts Toward 401(k) Limit? | Bankrate.com www.bankrate.com/finance/retirement/employer-match-counts-toward-401k-limit.aspx#ixzz22mXiRy4i

It's news to me and I find it annoying.

Still not sure if the math adds up in Romney's case.

[copzgirl1171]

Aug 6, 2012 10:58:33 GMT -5 @littlemoxie said:

Aug 6, 2012 10:33:49 GMT -5 KateAggie said:

If he's rolled over multiple 401Ks (since he hasn't worked at the same company for 20+ years), he's not held to x amount a year. Rollovers have no limits as far as amount.

Copz, I avoided this thread because it's likely to go nowhere, at least without more information. Right now, it's just guessing the circumstances...and lord knows I'm going to assume it's legit, and y'all aren't.

The rollover won't have a limit, but the 401k does. So I don't see how you get away from the problem of "how did you get so much money into these accounts that should be capped?"

Unless he got a 401k from each subsidiary of Bain capital or something. Not sure if that is legal.

But yeah... Assuming this is all legal, it just makes me more upset that he thinks the über rich need more tax cuts. They already have the means to create all these loopholes, isn't that enough?

Why can't I bold?

Anyway, you make a decent point about the subs of Bain.

I am off to look

[heliocentric]

Here's more on the highly compensated employee thing. I think the "answer" in my previous post was confusing.

Highly-Compensated Employees
If you're classified as a "Highly Compensated" employee, then you may be subject to contribution limits based on your employer's overall 401k participation rates. If your salary is above $110,000 in 2011 or $115,000 in 2012, then you may need to contact your employer to see if any additional limits apply to you.

For a highly-compensated employee, the total of your elective deferrals, and contributions made for you by your employer under a section 401(k) plan, can be no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated (rank-and-file) employees in a given calendar year.

[Daria Morgandorffer]

"So, I'm going with "not illegal, but will look really, really bad."

This is what I'm thinking. I don't think he's dumb enough to have done anything that's actually illegal.

[kadams767]

A few things, though. First, the 401(k) limit of $17k per year is just the pre-tax contribution limit. You can contribute more than that (somewhere around $50k total per year), it's just that the remaining funds are not contributied pre-tax. So, he could have done that for however long and rolled it over into an IRA without there really being anything shady. That being said, however, it would still take some very, very good investments to hit $100m.

Which is where the speculation of the devaluing of the Bain stock/equity/whatever they want to call it comes into play. Say Bain devalues it's stock such that the value at a certain time period is mere pennies. It's being speculated (I haven't honestly seen a confirmed source on this yet) that Romney and other principals were allowed to purchase or share in Bain equity via their 401(k) or IRA investment plan options. So, if at certain time periods, Bain capital shares were $1, and Mittens had $100,000.00 in a retirement account, his IRA/401(k) account could have purchased 100,000 shares. Once the stock is no longer being devauled and it takes off, say it goes up to $10/share. Those 100,000 shares that he paid $100,000 for are now valued at $1,000,000. It isn't a stretch that he could have done this on a larger scale.

ETA: You can have multiple 401(k) accounts, but the contribution limit is cumulative - you cannot contribute $17k pre-tax to 5 401(k)s, for instance. You can spread out the $17k amongst those 5 accounts, but that is the pre-tax limit.

[kadams767]

Aug 6, 2012 11:04:40 GMT -5 asdfjkl said:

Aug 6, 2012 11:01:42 GMT -5 @copzgirl1171 said:

Why can't I bold?

Anyway, you make a decent point about the subs of Bain.

I am off to look

This is why I want to know whether the $17K is a cumulative total or whether you could theoretically have 1000 different 401(k)s and give $17K per year to each of them. If it's a cumulative total for *all* 401(k)s you have, then it is mathematically impossible for him to have $100 million just from 401(k) contributions.

Wait, new thought: You can have as many IRAs as you want right?

You can have as many IRAs as you want, but your cumulative total contribution per year is $5k. See my post below about 401(k) contributions.

[copzgirl1171]

Aug 6, 2012 11:11:01 GMT -5 kadams767 said:

A few things, though. First, the 401(k) limit of $17k per year is just the pre-tax contribution limit. You can contribute more than that (somewhere around $50k total per year), it's just that the remaining funds are not contributied pre-tax. So, he could have done that for however long and rolled it over into an IRA without there really being anything shady. That being said, however, it would still take some very, very good investments to hit $100m.

Which is where the speculation of the devaluing of the Bain stock/equity/whatever they want to call it comes into play. Say Bain devalues it's stock such that the value at a certain time period is mere pennies. It's being speculated (I haven't honestly seen a confirmed source on this yet) that Romney and other principals were allowed to purchase or share in Bain equity via their 401(k) or IRA investment plan options. So, if at certain time periods, Bain capital shares were $1, and Mittens had $100,000.00 in a retirement account, his IRA/401(k) account could have purchased 100,000 shares. Once the stock is no longer being devauled and it takes off, say it goes up to $10/share. Those 100,000 shares that he paid $100,000 for are now valued at $1,000,000. It isn't a stretch that he could have done this on a larger scale.

Well, now ain't this a huge smelly mess. However, unless he comes forward it seems very possible..

[kadams767]

Aug 6, 2012 11:16:22 GMT -5 @copzgirl1171 said:

Aug 6, 2012 11:11:01 GMT -5 kadams767 said:

A few things, though. First, the 401(k) limit of $17k per year is just the pre-tax contribution limit. You can contribute more than that (somewhere around $50k total per year), it's just that the remaining funds are not contributied pre-tax. So, he could have done that for however long and rolled it over into an IRA without there really being anything shady. That being said, however, it would still take some very, very good investments to hit $100m.

Which is where the speculation of the devaluing of the Bain stock/equity/whatever they want to call it comes into play. Say Bain devalues it's stock such that the value at a certain time period is mere pennies. It's being speculated (I haven't honestly seen a confirmed source on this yet) that Romney and other principals were allowed to purchase or share in Bain equity via their 401(k) or IRA investment plan options. So, if at certain time periods, Bain capital shares were $1, and Mittens had $100,000.00 in a retirement account, his IRA/401(k) account could have purchased 100,000 shares. Once the stock is no longer being devauled and it takes off, say it goes up to $10/share. Those 100,000 shares that he paid $100,000 for are now valued at $1,000,000. It isn't a stretch that he could have done this on a larger scale.

Well, now ain't this a huge smelly mess. However, unless he comes forward it seems very possible..

Well, it also isn't illegal. So, I don't know.

Here is an older WSJ article that talks about the investment strategy and explains it much better than I did:

online.wsj.com/article/SB10001424052970204062704577223682180407266.html

[cookiemdough]

It is funny this is coming up. The last time we were talking about 401(k)s I was questioning whether contributing the max could even get you where you needed to be in terms of retirement in this country. I guess according to mittens it can!!!

[copzgirl1171]

Aug 6, 2012 11:22:37 GMT -5 kadams767 said:

Aug 6, 2012 11:16:22 GMT -5 @copzgirl1171 said:

Well, now ain't this a huge smelly mess. However, unless he comes forward it seems very possible..

Well, it also isn't illegal. So, I don't know.

Here is an older WSJ article that talks about the investment strategy and explains it much better than I did:

online.wsj.com/article/SB10001424052970204062704577223682180407266.html

I had no doubt it wasn't illegal, that is way to much money to be walking a fine line on but it certainly doesn't play well KWIM?

[kadams767]

Aug 6, 2012 11:24:44 GMT -5 @copzgirl1171 said:

Aug 6, 2012 11:22:37 GMT -5 kadams767 said:

Well, it also isn't illegal. So, I don't know.

Here is an older WSJ article that talks about the investment strategy and explains it much better than I did:

online.wsj.com/article/SB10001424052970204062704577223682180407266.html

I had no doubt it wasn't illegal, that is way to much money to be walking a fine line on but it certainly doesn't play well KWIM?

Oh, agreed 100%.

[KateAggie]

All I care about is if it's legal, and I'm assuming it is. Past that, we all know that he's Richie Rich, so I don't think this is a big game changer. Guess we'll see.

[kadams767]

Aug 6, 2012 11:40:21 GMT -5 KateAggie said:

All I care about is if it's legal, and I'm assuming it is. Past that, we all know that he's Richie Rich, so I don't think this is a big game changer. Guess we'll see.

Well, amassing his own wealth in this manner, which is not available to the normal middle class wage earners nor even most of the upper class, puts a bit of a taint on his "anyone can make their own wealth" bootstraps talking points.

[KateAggie]

Aug 6, 2012 13:36:28 GMT -5 asdfjkl said:

Aug 6, 2012 11:43:59 GMT -5 kadams767 said:

Well, amassing his own wealth in this manner, which is not available to the normal middle class wage earners nor even most of the upper class, puts a bit of a taint on his "anyone can make their own wealth" bootstraps talking points.

This is where I'm at. Plus the "I know your pain" bullshit from someone who doesn't have the slightest idea.

Do you really think there's a large number of undecideds or pro-Romney peeps that are going to see this and think "damn, I thought he was like me, but now..."