Hacker News Reader

Comment by sushid | Hacker News Reader

The intent of the article is to point out how the rich truly take advantage of existing tax laws/loopholes to stay even more rich.

No one is claiming Thiel did anything illegal. But it does seem a bit preposterous that billionaires can amass $5B Roth IRA accounts.

View on HN

The intent of ProPublica's entire series of articles is to imply that wealthy Americans are immorally building their wealth. They are taking advantage of the fact that the public doesn't have basic financial literacy to turn the public against wealthy Americans and some of our most important systems in America (Entrepreneurship, Joint-stock companies, etc).

Thiel bought a lotto ticket in his Roth IRA, after which he invested the earnings into other high-risk ventures which also worked out.

It is fascinating how the ProPublica articles are redistributed in mainstream media (BBC, CNN, etc) even though they are obviously wrong, biased and even based on stolen private data.

It’s almost as if someone is having an agenda…

The big argument was whether it was a true lotto ticket (say buying Bitcoin at 1 cent, where everyone accepts it's valued at 1 cent), or whether it was actually self dealing (real best-estimate value of shares was maybe $0.10 a share, and he bought in IRA for $0.001 a share). That means the true value of his IRA "contribution" becomes $170,000 instead of $1,700, which is clearly tax evasion.

Still a lotto ticket, but that first transaction becomes a lot less innocent.

I have basic financial literacy, and found that article insightful and alarming. Maybe your political views coloured your dismissal of the article series and “the public”.

I don’t think tax shelters for retirement accounts were designed to let financiers such as Thiel and Romney buy undervalued promising lottery tickets from themselves or their buddies, or should be used as such.

The (self directed) Roth IRA was "designed" to let people invest their money into assets that they choose.

I'm curious how he was able to get a Roth IRA in the first place. Apparently Roth IRA began in 1997 and there's a contribution limit if you make above a certain amount.Given that Thiel started "Thiel Capital Management" in 1996, I'm willing to bet he was above the earning limit.

Probably by a traditional IRA to Roth IRA conversion.

Anybody can have a Roth IRA. Even if you're over the income limit for a Roth, you can still convert a traditional to a Roth IRA after you pay taxes on the amount. These conversions are pretty common and well known.

Like every other SV startup, he was paid a decent salary with lots of stock and thus qualified under the income limits.

Says in the article he was below the limit.

If you're reasonably wealthy and you start a firm, there's no problem just taking a smaller salary. It's a little bit surprising that the rules don't address this though. Why not just say Roth IRA is for people with net worth under some figure? Or as mentioned in the article, put a cap on the amount of tax exempt money?

He wasn't a billionaire when he started the IRA account.

Reply on news.ycombinator.com