Come for the politics, stay for the snark.

Russian mouthpiece, go fuck yourself.

Nothing worth doing is easy.

Too often we confuse noise with substance. too often we confuse setbacks with defeat.

You cannot shame the shameless.

Republicans don’t want a speaker to lead them; they want a hostage.

A Senator Walker would be an insult to the state and the nation.

Too often we hand the biggest microphones to the cynics and the critics who delight in declaring failure.

Despite his magical powers, I don’t think Trump is thinking this through, to be honest.

Never entrust democracy to any process that requires republicans to act in good faith.

Everybody saw this coming.

When do we start airlifting the women and children out of Texas?

Fuck these fucking interesting times.

Make the republican party small enough to drown in a bathtub.

They’re not red states to be hated; they are voter suppression states to be fixed.

You can’t love your country only when you win.

The GOP couldn’t organize an orgy in a whorehouse with a fist full of 50s.

Let me eat cake. The rest of you could stand to lose some weight, frankly.

Shallow, uninformed, and lacking identity

Meanwhile over at truth Social, the former president is busy confessing to crimes.

Presidents are not kings, and Plaintiff is not President.

So it was an October Surprise A Day, like an Advent calendar but for crime.

If you tweet it in all caps, that makes it true!

Fuck the extremist election deniers. What’s money for if not for keeping them out of office?

Accused of treason; bitches about the ratings. I am in awe.

You are here: Home / Economics / C.R.E.A.M. / Everybody knows that the dice are loaded

Everybody knows that the dice are loaded

by | 85 Comments

This post is in: 

A great Kos diary from commenter Upper West on Mitt Romney’s IRA:

What was your return on your IRA, Keogh or Pension Plan last year? For the last 15 years? For 1984-1999?

If you did great you made maybe 5 or 10 percent a year. If the period coincided with the Bull Market, maybe over 10 or 15 years you made 80-100 percent.(EDIT: 10 percent over 15 years is actually 320%.)

But no matter how well you did, you did not do as well as Mitt Romney between 1984 and 1999. Mitt was allowed to contribute a maximum of $32,000 per year to his IRA and other forms of retirement accounts. So in 15 years, he contributed no more than $480,000.

And yet that account is now worth $102,000,000!

[…]

Using simple calculations, that equals a return of 21,250% (twenty one thousand two hundred fifty percent!). (EDIT: About 27% per year.)

Reader Interactions

85Comments

  2. 2.

    Patricia Kayden

    Stop being envious!! He did nothing illegal. Nothing but class welfare. (snip)

  4. 4.

    amorphous

    The bad math. It hurts my head. Methinks he does not understand compound interest.

  6. 6.

    Svensker

    You didn’t earn 183,327% on your IRA? Piker! Also, too, who’s your investment adviser? Obviously you need some retooling.

  7. 7.

    scav

    Oh dear, have we quite possibly stumbled into a down-side of letting (forcing) those little common people into the market so they have personally relevant points of comparison for the magic of the retirement markets?

  8. 8.

    Nina

    See, and if he released his tax returns we still wouldn’t know why, because it’s all not taxable! So there’s no point in showing how he moved those shells, you might as well just give him your next quarter and try again.

  9. 9.

    trollhattan

    Of course, Willard has more expenses so he needs deserves these rates of return in order to support his family in the manner to which they’re accustomed. Also, too, he’s a producer.

  10. 10.

    LGRooney

    OK, I’m well over a decade out from my finance MBA and rarely had the opportunity to use much of the stuff I learned because I was never in banking or on Wall Street but wouldn’t a present value annuity calculation be more accurate? Looks like the person went for a simple PV calculation of one year. Running it as an annuity means that one would have to have an average return of 67% over the 15 years to reach 102MM on a 32K annual contribution.

  11. 11.

    Mr Stagger Lee

    (sob…sob) LEAVE THOSE ENGINES OF THE ECONOMY ALOOONNNNEEE!!!
    (sob…sob) YOU CRUEL 99%er BASSSTEEERRRDDSSS!!!! LEAVE THE WALL STREEETERS ALLOONNNEEE!!! THEY ARE THE JOB CREATOOORRSSSS!!!! (sob…sob)

  12. 12.

    schrodinger's cat

    I am sure his rate of return was obscenely high, but something seems wrong with this guy’s calculation. Can someone check the math. I am suspicious he may have borrowed McMegan’s calculator for this calculation.

  13. 13.

    Steve

    There is a comment in the diary that explains how it actually happened:

    Another goodie allows private-equity partners to sock away almost any amount of their earnings into a tax-deferred IRA, while the rest of us are limited to a few thousand dollars a year. The partners can merely low-ball the value of whatever portion of their investment partnership they put away—even valuing it at zero—because the tax code considers a partnership interest to have value only in the future. This explains how Romney’s IRA is worth as much as $101 million. The tax code further subsidizes private equity and much of the rest of the financial sector by making interest on debt tax-deductible, while taxing profits and dividends. This creates huge incentives for financiers to find ways of substituting debt for equity and is a major reason America’s biggest banks have leveraged America to the hilt. It’s also why Romney’s Bain and other private-equity partnerships have done the same to the companies they buy. This is how Romney’s IRA is worth $101 million. The rich have rigged the rules to favor them. We taxpayers are subsidizing him.

  14. 14.

    Jim, Foolish Literalist

    Also, too, the Mittlets’ trust fund. They used similar tricks to slip a hundred million dollars past the gift tax. I just do not get people who think Romney “knows the economy”. Do they think Romney’s gonna use tax loopholes to balance the budget, somehow?

    @DougJ: You saw Halperin is just baiting the blogosphere with Both Sides today?

  15. 15.

    Z

    The difference between Obama winning and winning in a landslide is convincing those between the 80th and 99.9th quintiles that Romney’s career isn’t admirable but is just an exercise in taking advantage of opportunities not available to those without armies of lawyers and accountants. I bet there are a lot of people who will not only vote for Romney but send him money who will be shocked about this.

    On a similar note, every single response from Romney’s campaign on his personal tax issues is along the lines of “he paid every dime of taxes that he owed.” They’re never addressing how he managed to owe so little, how many taxes he’s yet to face because he hasn’t brought his money back to the States, etc.

  16. 16.

    Violet

    I love this bit of news because regular people can relate to it. People who are playing by the rules and putting the max into their IRA every year and have since they got their first job and it’s nowhere near that amount of money. Never will be.

    Regular folks will look at it and wonder WTF? He’s not playing by the same rules I am. The rules are made in his favor. That’s WRONG.

    And then President Obama wants to give them a tax break and may the super rich pay a bit more. And Romney doesn’t want that to happen. How do you explain that, Mr. $100M IRA?

  18. 18.

    Litlebritdifrnt

    Here’s an interesting story

    http://www.buzzfeed.com/mckaycoppins/romney-set-to-counterattack-on-bain

    In a conference call Monday morning, senior staff said Romney’s surrogates would stop shying away from the word “lie” in responding to Democrats’ attacks on his business record, and plan to go on TV to call Obama a “liar,” the source said.

    As Romney would say if he is going to start throwing the word “liar” around “what is sauce for the goose…”

  20. 20.

    Chukwu

    @Violet:

    And then President Obama wants to give them a tax break and may the super rich pay a bit more. And Romney doesn’t want that to happen. How do you explain that, Mr. $1M $100M IRA?

    FTFY

  21. 21.

    Steve

    More details:

    The Romneys won’t say, but Mark Maremont, writing in The Wall Street Journal, uncovered a likely explanation. When Bain Capital bought companies, it would create two classes of shares, named A and L. The A shares were risky common shares, to which they would assign a very low value. The L shares were preferred shares, paying a high dividend but with the payoff frozen, and most of the value was assigned to them. Bain employees would then put the exciting A shares in their I.R.A. accounts, where they grew tax-free. With all the risk of the deal, the A shares stood to gain a lot or collapse. But if the deal succeeded, the springing value could be stunning: Bain employees saw their A shares from one particularly fruitful deal grow 583-fold, 16 times faster than the underlying stock.

  22. 22.

    Z

    Also, Mitt wants to change the tax code to a territorial taxation system without any reforms that make Swiss bank accounts less effective. I’m pretty sure this means that the money he earns in the context of a phony corporation on Grand Cayman that buys companies so that Bain faces no risk would completely avoid US taxes. And he wants a foreign income tax holiday now so that him and his buddies can dodge taxes they’ve been avoiding by keeping their money out of the country since the last holiday in 2004 (speaking of which, it would be very interesting to see Mitt’s 2004/2005 returns).

  23. 23.

    Violet

    @Chukwu: I already fixed it. You are too late. Keyboard is wonky or maybe internet connection. I’m in the middle of a thunderstorm and we’ve already lost power once.

  24. 24.

    schrodinger's cat

    If you did great you made maybe 5 or 10 percent a year. If the period coincided with the Bull Market, maybe over 10 or 15 years you made 80-100 percent.

    It is unclear to me what this is supposed to mean, I have a feeling that the person writing this diary has no idea how compounding works or what exactly a percentage is.

  25. 25.

    LGRooney

    @schrodinger’s cat: And, if you understand compounding, a 67% annual return is one of those things that screams, “Something’s not right here!” That can happen with investments in upcoming firms, investment bubbles, a/o with penny stocks, but it is very rare to see and to think of it happening over a 15-year period consistently? I think the feds would be all over you to see what shenanigans you’re pulling to make sure that your selection and timing are some mixture of luck and brainpower vs. insider dealings.

    Steve, in 13 above, gets it right. Still falls in with the title of this post since it is an investment benefit available to a very select few.

  27. 27.

    Stooleo

    Take it away Robert Reich.

    Another goodie allows private-equity partners to sock away almost any amount of their earnings into a tax-deferred IRA, while the rest of us are limited to a few thousand dollars a year.

    No special rules for the likes of you peons.

  28. 28.

    David Hunt

    I asked my boss who is a CPA about this. He speculated that there was some sort of large retirement account that RMoney got from Bane and that was rolled over into the IRA. I’m not sure that I managed to get across that we were talking about $100M. I don’t know about retirement amounts as compensation at that level and my knowledge of those types of rollovers is inadequate. I still can’t make my mind get there. I read a speculation that Romney has investing through the IRA in funds that he has control over so that they could be bought at a discount. Possibly a deep discount. He wouldn’t have to pay a dime of taxes on the capital gains from the sale of those investments until he started taking distributions. If it was a Roth IRA, he’d have had to pay taxes (effectively) on the contributions into the account but he’d never have to pay income taxes on the investment gains in the account.

    That would be a great tax dodge if it worked that way, tied in with some bog-simple embezzlement and/or meney laundering. Buy investments in funds that you have control over. You let yourself buy it at a deep discount. The fund recognizes a capital loss since it (probably) sold the asset at less than it bought it for. The asset sits in a tax-deferred account (worst case for Romney) and he doesn’t have pay taxes on it for years, if ever. Plus there’s been a stealth transfer of wealth from the fund that you control to yourself. That’s a violation of the your fiduciary responsibility and pretty much straight-out theft.

    In short, I’d very much like to see how the fund got its value that high. Or to be more precise, I’d like an independent forensic accountant to look at it. I looked at the tax returns that Mitt released. They seemed to be designed to make your eyes glaze over and I prepare tax returns for a living.

  29. 29.

    Warren Terra

    What is that, a bit over a 60% return on investment every year (remembering that the $32,000 added in the fifteenth year doesn’t really count compared to the $32,000 added in the first year)?

    Well, I for one am prepared to believe he got 60% return every year on his IRA, and 10% return every year on his alleged wealth. I’m also interested in acquiring any bridges anyone might have lying around.

  30. 30.

    MikeJ

    @LGRooney:

    Running it as an annuity means that one would have to have an average return of 67%

    In Bernie Madoff’s scam, the one that everyone agrees was just too, too obviously too good to be true, he was promising a 20% return. People were walking around after he got busted saying, “How could anyone be so stupid as to believe they could get 20%?”

  32. 32.

    James Hulsey

    I ran the numbers myself, just using Excel.

    Assuming $32,000 contributed every year from 1984-1999, the annual rate of return required for the total to be worth $102M in 2012 is ~25.073% (doubling every 3.1 years).

    While it’s not unheard of to get a return like that for a single year, for it to average that every year for 29 years is ridiculous, and implies something else was going on.

  33. 33.

    Chris

    @Mr Stagger Lee:

    I love how they think the fact that they provide a valuable service, even if true, entitles them to either break the laws, not have the laws apply to them, or write their own laws (or all three).

    Hey, I used to mow lawns and I was pretty good at it. Does that entitle me to burgle my clients houses? I work ad a cashier now, does that entitle me to rob the cash register? Good to know!

  34. 34.

    PeakVT

    The partners can merely low-ball the value of whatever portion of their investment partnership they put away – even valuing it at zero

    Well, that’s nice. For everybody else, when they put something valued at zero into their IRA account, it’s cash. (Think about it.)

  35. 35.

    Chris

    @Mr Stagger Lee:

    I love how they think the fact that they provide a valuable service, even if true, entitles them to either break the laws, not have the laws apply to them, or write their own laws (or all three).

    Hey, I used to mow lawns and I was pretty good at it. Does that entitle me to burgle my clients houses? I work ad a cashier now, does that entitle me to rob the cash register? Good to know!

  36. 36.

    James Hulsey

    I ran the numbers myself, just using Excel.

    Assuming $32,000 contributed every year from 1984-1999, the annual rate of return required for the total to be worth $102M in 2012 is ~25.073% (doubling every 3.1 years).

    While it’s not unheard of to get a return like that for a single year, for it to average that every year for 29 years is ridiculous, and implies something else was going on.

  37. 37.

    PeakVT

    The partners can merely low-ball the value of whatever portion of their investment partnership they put away – even valuing it at zero

    Well, that’s nice. For everybody else, when they put something valued at zero into their IRA account, it’s cash. (Think about it.)

  38. 38.

    SatanicPanic

    I am at uninformed swing-voter level understanding when it comes to personal finance. So as one of those dummies, I gotta say, having $100 M in an IRA sounds totally ridiculous (and probably will to others on my level). Was he contributing $5 M a year? How would this work?

  41. 41.

    eric

    I think we now know who was running all those Nigerian bank scams given that the name of the I.R.A. is “Abuja, I.R.A.” /snark

  43. 43.

    Napoleon

    That guys math is just useless.

    @David Hunt:

    Although I don’t have $100m in my IRA I do have money I rolled into it from retirement accounts at places I am no longer employed, so you can do it.

  47. 47.

    Napoleon

    That guys math is just useless.

    @David Hunt:

    Although I don’t have $100m in my IRA I do have money I rolled into it from retirement accounts at places I am no longer employed, so you can do it.

  48. 48.

    Napoleon

    That guys math is just useless.

    @David Hunt:

    Although I don’t have $100m in my IRA I do have money I rolled into it from retirement accounts at places I am no longer employed, so you can do it.

  49. 49.

    Marcellus Shale, Public Dick

    the “law” of 72. you double your money if you get 12% average for 6 years.

    all that aside, dub-M has something else going on.

  50. 50.

    David in NY

    @David Hunt: I originally imagined some kind of rollover from Bain, but given the amount, $100M, I think the explanation is funding the IRA with undervalued stock, or stock designed to have low current value with the potential for enormous growth, and getting 67% per year appreciation out of it.

    In my business, criminal law. offering somebody 67% per year constitutes probable cause for arrest and indictment. Even Bernie Madoff wasn’t claiming he could do that.

    Ed: @MikeJ: Re Madoff, great minds, etc.

  51. 51.

    LGRooney

    @Chris: Tap your ego for your true value to society and start extracting that value.

    I told my wife some of these stories about Wall Street & the Lege and she commented that it’s just like all the corruption in the former Soviet Union. I disagreed stating that over there, on the books at least, it’s illegal. That’s how we’ve differentiated ourselves from those whom we constantly accuse of being unfathomably corrupt, we’ve legalized the same behaviour.

  54. 54.

    General Stuck

    Hahahahahah

    Faced with a barrage of attacks on Mitt Romney’s business record, the Romney campaign will start to “aggressively push back” today, BuzzFeed reports.

    The plan is that Romney’s surrogates would stop shying away from the word “lie” in responding to Democrats’ attacks on his business record, and plan to go on TV to call Obama a “liar.”

    Said a campaign source: “They are very fed up with these attacks.”

    No doubt they are fed up with them, mostly cause they are true and destroying the Romney campaign. So neener neener, pants of fire.

    So very delicate these flowers, and especially precious Mitt Romney calling anyone a liar.

  55. 55.

    Upper West

    @schrodinger’s cat: You would be referring to me. If you click the link, there is an update at the top that says:

    OK. OK. So taking into account compound interest, it’s annualized 27%, as some have pointed out. But it’s still a return that is 212 times as much as the total investment, or 1,746 times as much as the present value of $32,000 a year for 15 years — something that no one in the bottom 99.9% would ever have a hope of earning.

    I plead guilty to trying to write a catchy title to maybe get recommended on Kos. (It worked.) But of course, unlike the right, we here should not stoop to half-truths. On the other hand, “Romney’s IRA got 27% compounded!” just isn’t as sexy.

    How about: “Romney’s IRA got Madoff-like Returns.”

  56. 56.

    MikeJ

    @Upper West: Higher than Madoff, actually.
    From Wikipedia:

    Madoff’s annual returns were “unusually consistent”,[48] around 10%, and were a key factor in perpetuating the fraud.[49] Ponzi schemes typically pay returns of 20% or higher, and collapse quickly. One Madoff fund, which described its “strategy” as focusing on shares in the Standard & Poor’s 100-stock index, reported a 10.5% annual return during the previous 17 years. Even at the end of November 2008, amid a general market collapse, the same fund reported that it was up 5.6%, while the same year-to-date total return on the S&P 500-stock index had been negative 38%.[13]

  57. 57.

    beltane

    Geez, with investment returns (and legalized tax evasion) like that it’s no wonder these people think Social Security is obsolete.

  59. 59.

    Violet

    @Chukwu: It’s okay. I was having trouble posting at all, and then the power went out and so I’m not quite sure what got through. I went back and checked it and realized I’d made the mistake. At least the thunderstorm has moved through for now. Kind of scary when the entire building shakes from the thunder.

  62. 62.

    scav

    @Upper West: “Romney’s IRA got 27% compounded!” just isn’t as sexy

    Nah, but’s it’s that 27% again.

    when numbers get serious, you see their shape everywhere. . .

  63. 63.

    schrodinger's cat

    @Upper West: Something very fishy is going, with this IRA stuff. We need some forensic accountants to go through this boondoggle. I don’t think even hedge funds get that type of returns consistently year after year.

  64. 64.

    beltane

    @LGRooney: Well, it really wouldn’t look good for a communist proletariat state to have laws on the books favoring the interests of pluotcrats. And up until the fall of the Soviet Union it wouldn’t have looked so good if we had those laws either. But now that the obscenely wealthy don’t have to “look good” anymore, they have reverted to the ancien regime way of doing things.

    Just as the only thing keeping a hungry person from stealing is the fear of going to jail, the only thing that that keeps the rich from stealing is the fear of ending up like the Romanovs.

  66. 66.

    ant

    them fuckin check into cash fucks get interest rates that are pretty dang outstanding.

    where can I invest somea my shit into that?

  67. 67.

    Roger Moore

    @Chris T.:
    More like “socialize the risk, privatize the profit”. They set things up so that some people would win a little bit consistently (preferred shares) and some people would either win big or lose everything (common shares). Most importantly, that let them lie about the value of the common shares, claiming they were worthless so they could dump an almost unlimited number of them into the IRA without going over the contribution limit. It’s the lying about the real value of the common shares that’s the trick here.

  68. 68.

    TG Chicago

    @General Stuck: The thing is — this is a pure Rove play, and it’s a smart one. I have been hoping that Obama would go on the offensive calling Romney a liar, but I figured he was waiting until September to go for that attack.

    However, for Romney to start calling Obama a liar means that Obama will sound like he’s just parroting Romney’s attack. To the low-information voter, it will just come off like generic political sniping. And obviously the press won’t do anything to show that one side lies way more than the other.

    It’s a classic Rove move: attack the opponent on the basis of your own candidate’s weaknesses. That blunts your opponent’s attacks before they even come. Obviously it requires massive amounts of dishonesty, but there’s no downside for Republicans who lie.

    Laugh if you want, but with our dysfunctional press, this will be highly effective.

  69. 69.

    Jeff

    His return is not that high, what’s being missed here is that there are ways around the 401k and IRA limits. They’re called pension plans.

    You set up a small company/sole propreitership and you create a pension plan with a very generous calculation, like 100% of final average pay multipled by years of services or some such nonesense. If you’re older with a lot of service the pension plan is immediately wholly underfunded and you can jam massive cash into it to bring it up to funded status (way above the normal limits, essentially up to 100% of the COMPANY profit). Then when you “retire” you take your benefit in a lump sum, not an annuity. Sure you lose a little in the present value but you’ve created a neato tax trick. Doctor’s do this all the time, although not to this scale.

  72. 72.

    Wazmo

    Mitt Romney is the spirit and letter of Bain and Goldman Sachs personified and actualized-they offload the exposure to risk to those counterparties they engage in business with. Now extrapolate that risk-denying strategy foisted onto the US Government in a simultaneous hot war with Iran and a trade war with China. Trillions of unfunded US dollars and hundreds of thousands (if not millions) in human capital will be lost.

    With a strategy like that, nothing can possibly go wrong….go wrong….go wrong…

  74. 74.

    General Stuck

    @TG Chicago:

    According to your analysis, all republicans have to do is start yelling liar and they win. Even with a sorry msm, I think it is more complicated than that. And I don’t think even Rove would call out the L word dogs this soon, unless he and Romney sense they are getting steam rolled with a meme. And Romney would have to totally disavow his former life as a vulture capitalist, and he can’t very well do that/

    This is a winner for dems and Obama, for not only being true, but also a simple concept to communicate to lower info voters. They know about guys like Romney, and these days don’t much care for them. So no, I don’t think this is some 11 dimensional chess by Rove. I think they are scared and desperate that Their candidate is getting defined as he really is, and they have no factual or even plausible counter to that. So they scream “liar”.

  75. 75.

    General Stuck

    @General Stuck:

    And it is not only a winner for Obama, it is also itself, purely Rovian. Attack your opponents strength. And Romney’s entire campaign is based on his experience as a business man. Well, Obama has some words to describe that there.

  76. 76.

    Rafer Janders

    @TG Chicago:

    Also, too, Republicans get the advantage of how the media will report this:

    If Obama calls Romney a liar, the media’s reaction will be “eek! Uncivil! Not bringing us together! Chicago-style politics! Divisive!”

    If Romney calls Obama a liar, the reaction will be “Ooooh, Romney called Obama out! If Obama doesn’t respond, Obama will look weak! What a tough, gutsy move by Romney!”

    An attack by a Democrat will be denounced as uncivil. An attack by a Republican will not be seen as uncivil, but will be seen as a test of the Democrat’s manliness in responding. It’s lose-lose.

  77. 77.

    ericblair

    @Rafer Janders:

    If Romney calls Obama a liar, the reaction will be “Ooooh, Romney called Obama out! If Obama doesn’t respond, Obama will look weak! What a tough, gutsy move by Romney!”

    Yeah, but. Since just about every word out of Romney’s mouth has been slagging on Obama, I’m wondering if anybody out there in Murica actually thought he hadn’t called Obama a liar already. Also, might be a problem if you publicly call out your opponent for being a liar when, actually, he has the proof of his claims in his back pocket.

    Stupid fuckin move by the Worst. Candidate. Ever. The RomBot would be better off doing the Reagan thing of “hehe, there he goes again, poor lad doesn’t understand how the economy works, how job createrin’ works, just sad really.” Obama doesn’t have to call Romney a liar, just has to lay out the proof. And any bitchin’ that “it was perfectly legal!” means we go right into the lovely murky slimy world of how this stuff IS legal when you’ve got tens and hundreds of millions to sling around.

  78. 78.

    burnspbesq

    @Steve:

    The partners can merely low-ball the value of whatever portion of their investment partnership they put away—even valuing it at zero

    The class of stock that was specially engineered to go into IRAs had no claim on any assets that exist at that time, so it you liquidated the enterprise the holders of that class of stock would get nothing. All (all?) that stock had was a claim to a share of future appreciation, which might or might not ever happen.

    That’s how you can support a near-zero value. It’s plain-vanilla financial theory, no rocket surgery involved.

    If you want to be fancier about it, you value that stock as though it were an option, and use a high value for volatility in the Black-Scholes equation. Gets you to the same place.

  79. 79.

    burnspbesq

    @Jeff:

    You set up a small company/sole propreitership and you create a pension plan with a very generous calculation, like 100% of final average pay multipled by years of services or some such nonesense. If you’re older with a lot of service the pension plan is immediately wholly underfunded and you can jam massive cash into it to bring it up to funded status (way above the normal limits, essentially up to 100% of the COMPANY profit). Then when you “retire” you take your benefit in a lump sum, not an annuity. Sure you lose a little in the present value but you’ve created a neato tax trick. Doctor’s do this all the time, although not to this scale.

    That scam doesn’t work nearly as well now as it did before 1982. Before the first Reagan tax hike, the doctor could “integrate” his DB plan with Social Security, so that if his support staff made less than the Social Security wage base he didn’t have to contribute for them. The so-called “top-heavy plan” rules put an end to that. Now the doctor has to contribute a little sumpin sumpin for all his employees.

  80. 80.

    Catsy

    @Litlebritdifrnt:

    In a conference call Monday morning, senior staff said Romney’s surrogates would stop shying away from the word “lie” in responding to Democrats’ attacks on his business record, and plan to go on TV to call Obama a “liar,” the source said.

    Oh yes, please do this. I couldn’t bear the thought of being thrown into that particular briar patch…

  81. 81.

    Paul in NC

    I’m math challenged, but if you multiply $480,000 times 1.27, and do that 14 more times with each result, you get about $17.3 million. And this assumes that the entire $480K was in the account from year one, rather than starting with $32K and adding $32K each year. Gotta be more than a 27% return.

  82. 82.

    David in NY

    @TG Chicago: You’re right! Look how well calling the Swift Boaters liars worked for President Kerry. (Or would have worked, since I don’t think he personally ever did that. But then, I don’t think you’ll hear Mitt personally attacking Obama.)

  83. 83.

    Jeff

    @burnspbesq: Agreed. But for Rmoney the trick is to be a sole proprietor or just have one co- employee who is near his level. Most o his wealth was earned after he left Bain due to sweetheart deals and I bet he was getting paid on a 1099, then he passed through most of it to his db plan, then rolled it out to an Ira later. Slimy un-American crap but that never bothered Rmoney.

  85. 85.

    Fargus

    @Paul in NC:

    Here’s the assumptions I made: the $32,000 each year was deposited at the beginning of each year, with an equal rate of interest earned each year on the entire amount in the account by the beginning of that year. By the end of the 15 years (including a 16th $32,000 contribution right at the end), the rate of return to get to $100,000,000 seems to be 60.20213241%.

Comments are closed.