Favored Tax Dodge of the Uber Wealthy

To avoid paying taxes, you don’t have to have a numbered Swiss bank account. You don’t have to move your money to some clandestine offshore banking haven. No Sir…Ma’am. It’s much easier than that. What’s more, you have US Government’s blessing and it’s been right in front of your face for the last quarter century’ish.

The preferred method of some of the most well-to-do is through a Self-Directed ROTH IRA (SDIRA). The Self-Directed IRA allows you to own alternative assets that you can’t hold in your traditional IRA or 401k. The ROTH election is what allows for the favorable tax treatment.

"But if you believe that tax rates will be higher in the future, like when you retire, then the ROTH SDIRA offense is your best defense to keep more of what you’ve earned."
Only the Richy Rich’s can win at tax code bingo

From a recent article by ProPublica, it was reported that PayPal Co-Founder Peter Thiel’s account balance is in the neighborhood of $5 Billion and has grown from meager beginnings of about $2,000 back in 1999. If you have access to pre-IPO shares of a game-changer technology stock, I highly recommend you pick some up (Save Ferris!)…and hold them in your SDIRA. Probably not, and yeah, sometimes it can feel like only the Richy Rich’s can win at tax code bingo. But this tax strategy is available to all red-blooded American investors.

The wrong moves can still lose money

Sure, there are rules to follow and brevity precludes me from illustrating them here. But if you believe that tax rates will be higher in the future, like when you retire, then the ROTH SDIRA offense is your best defense to keep more of what you’ve earned.

There is one inescapable catch; however, you still have to invest prudently and tirelessly battle the risks, or no matter how tax efficient you are, the wrong moves can still lose money.

To that point, holding a diversified portfolio of Senior Life Settlements in a Self-Directed retirement account takes most of the principal risks off the table. Life settlements are life insurance asset-backed securities that boast a known cost and a known yield. For Pete’s sake, what else can you invest in that contractually binds you to a certain outcome? Don’t answer…loaded question.