By Margaret Collins and Richard Rubin
If it seems impossible to amass a fortune in an IRA during your lifetime, think again.
The Government Accountability Office reported yesterday that about 9,000 U.S. taxpayers have each accumulated at least $5 million in individual retirement accounts. While the GAO didn’t say how they managed to do so, Mitt Romney and some other successful executives offer a road map....
Looking for ways to cobble together a fortune in an IRA under the current contribution limit of $5,500 a year? Here are possible strategies:
First, work at a startup.
If you’re an entrepreneur, you can create more than one share class of stock at your company and put $1,000 in a standard or Roth IRA, said Bill Parish, president and chief investment officer at Parish & Co., an advisory firm based in Portland, Oregon. If some shares are valued as low as $0.000001, as Yelp Inc. reported in its S-1 filing with the Securities and Exchange Commission in 2012, that buys a chunk of equity.
Direct ‘Transfer’
“The key is that you transfer the stock directly from the company to your IRA,” Parish said.
As the securities appreciate, investors can sell and diversify into other holdings tax-free until they withdraw funds. Or, in the case of a Roth IRA, the gains aren’t taxed at all, Parish said.
Max Levchin, chairman of San Francisco-based Yelp, reported 2.7 million shares of the company’s Class B Common Stock in his Roth IRA, according to this year’s proxy statement. Class B shares of Yelp are convertible at any time by the holder into shares of Class A on a one-to-one basis, according to the filing.
Yelp shares closed at $76.54 in New York yesterday. That comes out to about $206 million worth of Yelp shares in his Roth account.
Read the rest here.
No comments:
Post a Comment