How would you like to have $113 million dollars in your retirement account, all waiting for you to withdraw at retirement tax free?
That’s the amount some people has in their Individual Retirement Account (IRA).
And even though the IRS isn’t all that happy about it there’s nothing they can do (except chafe). ‘Cause what some people do is perfectly legal.
We’ll tell you how they did it, and how you, too, could set yourself up for a huge retirement windfall by using a little trick the IRS doesn’t want you to find out about.
It’s one of the many strategies we’ve uncovered for our members in our new Wealth Blueprint.
Don’t Retirement Accounts Have Limits?
Now (traditionally speaking), it should be nearly impossible to build up $113 million in an individual retirement account. At least that’s the way the government planned it.
When the US Congress passed the law allowing Individual Retirement Accounts (IRAs) in the mid 1970’s, they put strict limits on the annual contributions you could make.
You could only put $1500 per year into the account (or 15% of your household income – whichever was less). You could deduct any IRA contribution from your taxable income… and taxes on gains within the fund were deferred until withdrawal (usually at retirement).
If you had started an IRA back when they first started and put away the maximum each year and if you somehow managed to earn a steady 6% interest per year, you’d have around a quarter million dollars today.
Not bad. But you’d hardly be “rich.”
Back in 1974, the government felt that was a great deal for the Middle Class. We were supposed to thank them profusely. After all, no middle-class citizen should need (or want) more than a quarter million dollars!
The reality was, Uncle Sam didn’t want the middle class to become rich off these retirement accounts. Just satisfied. That’s how they designed it.
Plus, they knew they’d get to tax your “profits” once you retired.
But that changed in 1997 when Congress introduced the Roth IRA as part of the Taxpayer Relief Act.
The Roth IRA still had contribution limits (raised to $2000 per year).
The big difference was that you paid tax on the money before you put in…
…but when you withdraw that money at retirement (including profits), you take it out completely tax free.
The Hidden Power of the Roth IRA Revealed
Roth IRAs became a big hit. And a new group of young, savvy, dot-com investors found a lucrative loophole that has allowed them to bank millions of dollars inside their IRAs, tax free.
The cofounder of Paypal in 1998 (it was his idea). He then founded the social media sharing company called Slide in 2004. He also was instrumental in founding Yelp, a social media review site, and is currently that company’s chairman.
Each of these companies made him millions of dollars. And he smartly tucked much of it away into his Roth IRA.
But it’s how he put the money into his Roth IRA that made the difference and could be the insight you need to supercharge your retirement fund.
Here’s the basics of how he could take a $2000-$5000 per year contribution limit (max contributions have risen over the years) and turn it into a multi-million dollar mega-fund:
He funded his Roth IRA with ultra-low value company stock. Stock that he knew was about to soar.
You see, when a company is a startup, the shares are often dirt cheap. The founders often get millions of shares that (at the time) may be valued at a fraction of a cent per share.
Let’s just assume that a start up company’s stock is priced at one cent per share. That would mean you could place 200,000 shares of that stock inside your IRA and still be within the $2000 yearly limit.
Then let’s suppose the company becomes hugely successful (like PayPal) and the price per share skyrockets from a penny up to $20. You can now sell the stock shares inside your Roth and bingo! You have $4 million cash now sitting in your Roth IRA account.
That’s $3.99 million profit … all tax free.
But it gets even better. Take that profit (sitting in your IRA) and invest in another startup company.
That means now you can use the entire $4 million to buy up the new company’s dirt-cheap shares. Watch the company grow. Then sell the shares. Rinse and repeat.
All the proceeds are bought and sold within the Roth IRA — safely protected from taxes at withdrawal time – as long as you play by the rules (the current rules say you must keep those funds inside the Roth and not touch them until age 59½ ).
We don’t know exactly how many shares of Paypal he had in his Roth IRA…
… but we do know that he used this “trick” with Paypal shares, and then with two more startup companies after that (Slide and Yelp).
After eBay bought out PayPal in 2002, his share was roughly $34 million. Not bad for three year’s work!
Using his proceeds from Paypal’s buyout, he started Slide. Google bought Slide for $182 million in 2010. Once again, it’s unknown exactly how many Slide shares of Slide he had in his Roth.
But we do know this:
He got involved in another social media review site called Yelp. He had 7 million shares of Yelp in his Roth IRA in 2010. He sold a portion of those shares for a $10.1 million “gain” in his retirement account that year.
But here’s what’s amazing: SEC filings show that Max kept 3.9 million shares of Yelp in his Roth IRA. As of September 2012, Yelp is trading around $26.50 per share. Which means if he sold them now, his IRA would have $103 million cash (which he could use to buy more shares of another startup).
So what’s the lesson for you and me?
If you want your IRA to grow like it’s on financial steriods, do you need to put high-growth startup investments in your IRA?
Maybe. If you’ve got insider knowledge or are part of the startup’s success or failure it could work out.
But unless you are involved in the startup company, it could be a huge risk. Investing in so-called “penny stocks” is rarely profitable except for true insiders.
So, the real question is…
How Can You Benefit from His Technique?
It involves a particular commodity. We expect this commodity to be a vehicle in the greatest wealth transfer in the history of mankind.
Which means that as the economy crashes, massive wealth will be transferred into this asset class.
And that means even a small investment in this commodity sitting in a Roth IRA today could grow to tremendous proportions during the coming wealth transfer. Just like the co founder of PayPal watched his startup shares soar in value.
What is that commodity? Precious metals.
And silver could be the metal that has the most potential for tremendous growth.
How to Cash in Your Silver (or Gold) Profits Tax-Free
You see, any “gains” you realize inside your Roth IRA will be tax-free disbursements (just like he had with his Yelp shares), as long as you follow the age rules.
The only problem is that most people set up IRAs with a big broker or financial planner and are limited to stocks, bonds and mutual funds.
In order to place hard assets (like silver, gold or real estate) into your IRA, you must reconfigure it.
You’ll need to structure it correctly and use a special custodian who handles the government oversight and paperwork.
It’s not difficult, but it’s not a do-it-yourself project either. You’ll need guidance.
One of our strategies shows you the ins and outs of how to do this. It’s called How To Legally “Free” Your IRA And Invest The Money Wherever You Choose…
If you decided to hire someone to establish a Roth IRA (or convert an existing one) so that you can purchase silver and gold in it, you’ll want to read this book first.
If you’ve been embarrassed by the pathetic growth rate of your IRA or 401(k), this strategy alone could turn your retirement into the prosperous, happy, stress-free lifestyle you’ve always dreamed about.
It’s worth a look…