--- title: Closing the Loophole Behind $10 Million Tax-Free Retirement Accounts description: Fewer than 1,100 of 43 million IRA owners have what may be called outsized balances, and the IRS wants to rein them in. authors: - name: Dan Kadlec url: https://money.com/author/dan-kadlec/ at_money_since: 2014 articles: 146 covers: - Retirement - Banking - Career Advice - Education - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Personal Finance - Taxes former_staff: true published: '2014-11-24T11:00:23.000Z' modified: '2014-11-24T11:00:23.000Z' section: Retirement tags: - GAO - General Accounting Office - IRAs - mitt romney - Retirement - Saving word_count: 588 canonical: https://money.com/gao-report-ira-mitt-romney/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Closing the Loophole Behind $10 Million Tax-Free Retirement Accounts](https://img.money.com/2014/06/140618_money_gen_3.jpg?quality=85&w=1012&h=569&crop=1) The former presidential hopeful Mitt Romney lit a fuse three years ago when he disclosed [his IRA](http://business.time.com/2012/01/20/romneys-ira-big-and-possibly-misdirected/) was valued at as much as $102 million. Now the federal government wants to keep the issue from exploding, and is weighing actions that would prevent rich people from accumulating so much in a tax-advantaged account. Last week, the General Accounting Office recommended that the IRS either restrict the types of investments held in IRAs or set a ceiling for IRA account balances. The idea is to give all taxpayers equal ability to save while making certain the amounts put away tax-advantaged do not go beyond what is generally regarded as sufficient savings to secure a comfortable retirement. Romney’s campaign disclosure caught almost everyone by surprise. How could one person build such a large IRA balance when yearly allowable contributions -- up to [$5,500](http://www.irs.gov/Retirement-Plans/COLA-Increases-for-Dollar-Limitations-on-Benefits-and-Contributions) a year in 2014 and [$6,500](http://www.irs.gov/Retirement-Plans/COLA-Increases-for-Dollar-Limitations-on-Benefits-and-Contributions) if you’re age 50 or older -- have always been comparatively low? The answer lies in the types of investments he and privileged others were able to put in their IRA: extremely low-priced and often non-public securities that later soared in value. One such security might be the shares of a privately owned business. These can reasonably be expected to take flight if the business does well and later goes public. That produces a wealth of tax-advantaged savings to company founders, investment bankers and venture capitalists. But these gains are [not generally available](http://blogs.wsj.com/totalreturn/2014/11/19/how-a-5000-ira-can-grow-to-196-million-in-six-years-gao/) to any other investor. Once an asset is inside an IRA there is no limit to how valuable it may become and still remain in the tax-advantaged account. Restricting eligible IRA holdings to publicly available securities is one way to level the field and rein in the accumulation of tax-advantaged wealth. Another way is to cap IRA balances at, say, $5 million and require IRA holders to take an immediate taxable distribution anytime their combined IRA holdings exceed that threshold. The GAO [found](http://www.gao.gov/products/GAO-15-16) that the federal government stands to forego $17 billion of 2014 tax revenue through the IRA contributions of individuals. That’s not a high price to pay for added retirement security for the masses. The problem is that under current rules only a select few will ever be able to put together multi-million-dollar IRAs. There are 43 million IRA owners in the U.S. with total assets of $5.2 trillion. Fewer than 10,000 have more than $5 million, and the GAO seems to have little quarrel with even this group. They tend to be above-average earners past age 65 who had been contributing to their IRA for many years—pretty much exactly as designed. But just over 1,100 have account values greater than $10 million and only 300 have account values greater than $25 million, the GAO found. “The accumulation of these large IRA balances by a small number of investors stands in contrast to Congress’s aim to prevent the tax-favored accumulation of balances exceeding what is needed for retirement,” the report states. Officials are now gathering data on the types of assets held in IRAs, including the so-called “carried interest” stake that private equity managers have in the investment funds they run. These stakes, which give them a percentage of a fund’s gain, are another way that a select few manage to sock away multiple millions of dollars in IRAs. No one doubts the data will illustrate that only a privileged few have access to outsized IRA savings. The Romney campaign showed us that three years ago. *Read next: [3 Ways to Have a Happier, Healthier Retirement](https://money.com/healthier-retirement/?xid=time_readnext)* ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/gao-report-ira-mitt-romney/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "IRAs", "item": "https://money.com/iras/" }, { "@type": "ListItem", "position": 4, "name": "Closing the Loophole Behind $10 Million Tax-Free Retirement Accounts" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/gao-report-ira-mitt-romney/#webpage", "url": "https://money.com/gao-report-ira-mitt-romney/", "name": "Closing the Loophole Behind $10 Million Tax-Free Retirement Accounts", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2014-11-24T11:00:23.000Z", "mainEntity": { "@id": "https://money.com/gao-report-ira-mitt-romney/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/gao-report-ira-mitt-romney/#breadcrumb" }, "dateModified": "2014-11-24T11:00:23.000Z" }, { "@type": "Article", "headline": "Closing the Loophole Behind $10 Million Tax-Free Retirement Accounts", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2014/06/140618_money_gen_3.jpg?quality=85", "width": 5031, "height": 3342 } ], "author": [ { "@type": "Person", "name": "Dan Kadlec", "url": "https://money.com/author/dan-kadlec/", "@id": "https://money.com/author/dan-kadlec/#author", "image": "https://img.money.com/2012/01/5336549112.jpg?quality=85&w=640&h=640&crop=1" } ], "publisher": "https://money.com/#organization", "datePublished": "2014-11-24T11:00:23.000Z", "description": "Fewer than 1,100 of 43 million IRA owners have what may be called outsized balances, and the IRS wants to rein them in.", "abstract": "Fewer than 1,100 of 43 million IRA owners have what may be called outsized balances, and the IRS wants to rein them in.", "@id": "https://money.com/gao-report-ira-mitt-romney/", "inLanguage": "en-US", "dateModified": "2014-11-24T11:00:23.000Z", "wordCount": 588, "keywords": [ "GAO", "General Accounting Office", "IRAs", "mitt romney", "Retirement", "Saving" ], "about": [ { "@type": "Thing", "name": "Retirement", "sameAs": [ "https://en.wikipedia.org/wiki/Retirement" ] }, { "@type": "Thing", "name": "Individual retirement account", "sameAs": [ "https://en.wikipedia.org/wiki/Individual_retirement_account" ] } ] } ] } ```