Mitt Romney’s Self-Directed IRA

Mitt Romney, the son of the former Governor of Michigan and himself the former Governor of Massachusetts and the GOP candidate for President in 2012, probably owns the most famous IRA in the world. The total amount of wealth he has in the IRA is unknown. He had to declare it as part of standard disclosure laws during the 2012 election cycle, but the law only requires candidates to disclose a range of possible values. As of 2012, his IRA held somewhere between $20.6 million and $101.6 million in estimated worth.

How did he do it? Entrepreneurial spirit, a tolerance for risk, substantial investment and financial knowledge, and a Self-Directed IRA.

Roots in Bain Capital

As a young man, Romney helped to create a private equity company called Bain Capital, still operating today, though Romney has not been with the company formally since 2002 (he actually took a leave of absence as CEO of the firm beginning 1999 to head the Salt Lake City Olympic Games Organizing Committee).

While there, however, Romney invested a good deal of his own retirement investments in Bain Capital deals – generally venture capital investments and private equity investments in various industries.

Self-Directed IRAs

Both venture capital and private equity are perfectly legal to own within an IRA, or any other type of retirement account. Few well-known investment companies offer direct exposure to these markets off-the-shelf, but Romney was able to do what thousands of our other successful American IRA, LLC clients do: Establish an IRA of his own with a third-party administrator or custodian, and have the IRA hold the investments on his behalf. In Romney’s case, he may well have had a 401(k) while at Bain & Company or at Bain Capital, and rolled his account balance over into the IRA at some point. It would be unusual for an individual in Romney’s league, financially, to be able to qualify for a tax deduction for a contribution to a traditional IRA.

However, he only drew a symbolic salary of $1 per year for part of his tenure there, so he besides rolling a balance over from a 401(k), Romney could have contributed to a traditional IRA in two other ways:

  • Contribute up to the maximum allowable limit of $2,000 at that time (now $5,500) and take a deduction during years his income was unusually low.
  • Make non-deductible (after-tax) contributions to the IRA.

Benefits of Self-Directed IRAs

Why would someone like Romney be attracted to using a Self-Directed IRA? Several reasons:

  • He doesn’t need the money immediately to live on.
  • He wants the benefit of tax deferral.
  • Wealth protection. Under federal law, IRAs are generally protected against creditors up to $1 million. That means they are not subject to forced liquidation in the event a plaintiff sues you and gets a judgment against you. Assets held in your own name, however, are fair game.

Some states allow an unlimited IRA exemption in bankruptcy.

Will Self-Directed IRAs Work For You?

Obviously, Mitt Romney’s an exceptional case. But thousands of Americans nationwide have experienced tremendous success by taking more personal control of their IRA investments, using Self-Directed IRAs to diversify their portfolios and find high-return investment niches to exploit – niches that aren’t generally available from conventional investment companies.

To learn if a Self-Directed IRA might work for you, or to get started, call us at 866-7500-IRA(472) or visit us at, and peruse our extensive reference library.

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