This article is not as lyrical as ER's explanation, but it might be more informative.
IRA income is not "hidden." The IRS knows quite well where everyone's IRA money is. Taxes on IRAs are deferred, not eliminated.
I don't know why Romney went this route. In a few years, the law says he will have to start withdrawing a given percentage of the IRA money every year, and pay taxes on it at the ordinary (not capital gains) rate. I figure from online calculators that the annual tax hit will be something like $1.3 million, every year for almost 30 years.
A Roth IRA might have been a better deal. As I understand it (I'm no tax expert) you pay normal taxes on what you put into it, but any increase in value while it's in the account is not taxed if you wait until retirement to take it out. A good deal for things like stock and real estate.
Flame » in reply to I'm kinda curious about that $100,000,000 IRA of Romney's.
IRA
The whole thread (19 posts)
- Harry Reid's brilliant move