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The question has been asked “Is it possible for Mitt Romney to contribute to a traditional IRA and accumulate a $100 million in his account by age 65?” As they say on Faux News “some say yes and some say no”. I am not an accountant and I don’t play one on television, but I do read and I can add. There are several nuances that come into play in calculating IRA contributions and earnings and your mileage and my assumptions may vary. To calculate how much you will have at the end of a given time period we need to take a history lesson.

The IRA program started in 1974 with the enactment of the Employee Retirement Income Security Act (ERISA). At that time the maximum amount allowed as an IRA contribution was $1500 from tax year 1975 to 1981, $2k from 1982 to 2001, $3k from 2002 to 2003, $4k from 2004 to 2007, and $5k from 2008 to today. An additional $250 could be contributed for a non-working spouse (no cracks about Ann, raising children and a horse is hard work) and an additional $1k since 2006 for what is called a catch-up after you reach age 50 for a maximum contribution of $6k each calendar year on earned income per taxpayer. 1974 until last tax year (2011) would only give him 38 years in which to contribute, invest and grow his portfolio. Not enough time to accumulate $100 million (we really don’t know how large it is because we haven’t seen his tax returns) in a “traditional IRA”. As you can see there are a lot of variables, but we can approximate earnings for each of the years and assume maximum contributions to get close enough for politics.

If he contributed the maximum allowable, plus catch-up and spouse contributions during those 38 years to a personal IRA he could only have contributed about $115,750, the maximum allowable by the IRS and possibly earned $727,625.56 since the 1975 tax year assuming 10% earnings each year for a total IRA value of $843,375.56. Again these numbers could vary wildly, depending on your methodology and investment abilities. As I said before your mileage may vary. Yes, I know that there are many in America that may have exceeded the 10% earnings level for some of those years and others that would put their dog on the roof of their car to earn 10% during the Bush years, but we know anecdotally that Mittens has greatly exceeded our wildest expectations. There are certainly millions that would like to have that hypothetical $843k nest egg to retire on. As I said before we have to start somewhere and make assumptions. We will give him the benefit of the doubt that he does know how to invest (that’s what he calls it). As a point of reference the median IRA balance in 2008 was $70k, only 6.3% had balances of $250k or more. Mittens is in rarified territory here (5000 times the median IRA valuation). He is truly a certifiable 1% poster child.

Those maximum contribution and earnings numbers are nowhere near the numbers that have been circulating around about his IRA, so if he did it then “how did he do it”? Being in the “vulture capital” business he undoubtedly had access to some “creative” methods to “value” assets he placed in a “self-directed” IRA portfolio. So much for your blind trust story Mitt. An IPO for instance valued at $10 when purchased by an insider like Mitt could be placed into his IRA. Let the miracles of “growth” happen and the IRA is worth hundreds of times its initial value. It helps to know people or be in the right place at the right time (wink, wink). He could also take advantage of a 401k or SEP rollover into his traditional IRA. All very legal and advantageous because they have higher contribution and income level caps, thus allowing larger purchases of higher growth assets to be placed into his portfolio. If we were to stipulate that he indeed has a very large IRA ($10-$100 million depending on where you get your data) then you probably know why he doesn’t want you to see his tax returns. The tax dodges and shelters may not work if the rest of us know and attempt to use them.

He is “running for President for Pete’s sake” and it might be embarrassing for hundreds (hopefully thousands) of accountants and attorneys out here examining multiple years of his tax returns. An examination the IRS would never have the resources to perform. Who knows how many “shortcuts”, only available to the 1%, we would discover. They may not be strictly illegal, but for a church going Mormon he may not want his family to know where there money comes from. Could it be as Harry Reid’s source has claimed that Mittens hasn’t paid any taxes or could it be there are some very shady holdings he would prefer to keep hidden? There could be investments that even the GOP would be ashamed of (it’s hard to imagine). We may never know and it’s for sure Mitt isn’t going give it up, at least not until he is elected. I apologize for that image.

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