I'm excited about this topic because this is a good one. It's about Roth IRAs and why the government is starting to target Roth IRAs and saying, "Let's look at this Roth IRA thing, let's focus in, let's get the telescope down to Roth IRAs. These people are going to get this tax-free money when they pull it out of their Roth IRAs. Why are we letting people do that?" Because you put it into law! That's why. But as most politicians, they forget that they have creative memories. We're going to go through why, as they say in the South, they've got a bee in their bonnet about Roth IRAs.
I am dialed in. I've got a red phone to people in DC, the biggest people on the planet about finance. They call me, I call them, they text me, I text them, we go on the boat and the jets and all that stuff. I'm hanging out with these people. And with that being said, because I do have the pulse on all of this, the reason that the Roth IRA is now in the targets and the sights of politicians is because of one person. One person? How's one person create that? Well, let me give you the story: his name's Peter Thiel, a billionaire of mammoth proportion.
In 1999, Peter Thiel opened a Roth IRA. He followed all the rules and put in $2,000 in 1999. Now, Peter is a brilliant person to say the least. He gets some sweetheart deals, some deals I'm assuming we can't get, IPOs. But he played by the rules. He put his $2,000 in his Roth IRA. And at the time of this blog, the value of that Roth IRA has grown from $2,000 to $5 billion. Now, it's a Roth IRA, so that $5 billion, he can pull that out tax-free according to the rules at the time of this blog and Roth. You pay the taxes upfront, it grows, and then you can pull it out tax-free. That's the reason people convert IRAs to Roth IRAs. But you know what, in the world of fairness where there needs to be wealth, just redistribution and fairness, people say it's not fair that Peter has $5 billion. But he played by the rules. Some politicians say that wasn't what we were thinking. And I'm going to tell you this about the Roth IRA. I'm old enough to know when that baby was put into law back in the day, and politicians were trying to figure out how to tax that. As they're walking out after they just voted for it, they're going; we got to tax that somehow. Politicians have to tax and spend, tax and spend, tax and spend. And now they put this thing in called a Roth IRA that you pay your taxes upfront, and then it will be tax-free. I've always said from day one I'm not sure I trust the politicians, do you?
I want you to think about it. Think of the leap of faith you're making with DC on a Roth IRA conversion, converting from a traditional IRA to a Roth and paying all those taxes upfront to have Roth IRA money like Peter Thiel to take money out in the future tax-free. Do you trust DC politicians? Do you think, at some point in time, they might float the trial balloon of testing for rich people like Peter Thiel? In the future, do you think they might say, well, yes, it's tax-free, but you can only use it tax-free for healthcare and education and whatever is politically correct then? Maybe. Does that mean you don't convert your traditional IRA to Roth IRA? That's not what I'm saying. What I'm saying is to be very careful. Do your homework, and let's watch what's happening at the time of this blog in DC. Let's also think logically.
In the past couple of years, and due to COVID, there's been a lot of money printed, trillions and trillions of dollars. They keep saying we need to pass this bill and spend more money to address inflation. And I'm like, what? The economics classes you and I took say no, it doesn't work like that. The bottom line is if they're printing all this money, they're going to have to pay for it eventually. And no, they're not going to mint a trillion-dollar coin to pay. They've got to pay; they've got to raise the money to offset all this spending.
I'm in your corner if you have one, and I hope they don't go after it. For people that own Roth IRAs, in my opinion, this is a very small voting block of Roth IRAs. A politician could easily take everybody with a Roth IRA and pigeonhole and categorize you into the evil rich, into people who aren't patriotic and don't want to pay taxes. You and I both know that's garbage. That's horrific nonsense. But it'll sell to the masses because you have to remember that news is written and given back to you at a sixth-grade level when you watch the evening news every night. Don't believe me? Look up the stats. At a sixth-grade level, that's how people process information. And for people that don't have money or haven't saved or just for whatever reason they're in that situation, they're going to buy "the evil rich have Roth and don't want to pay taxes." They won't understand that you've already paid them upfront. They won't understand that the DC politicians are going back on their word and the law in place. Everything's up for grabs right now, and we're are in a blue water strategy where all this money's being printed.
The last time we can look back was World War II, when we printed all of this money. And there's an argument that COVID is World War III, but at the end of the economic day, macro, microeconomics, whatever you want to look at, all this money must be paid for. I read a story the other day that there's 30% more currency now than before COVID due to money being printed on a large scale.
The question is, can they come after Roths? Yes. Will they? If you're thinking about doing a huge Roth conversion, you should tiptoe in and incrementally do that and see what happens in the political world. So, Roth IRAs, am I a fan of those? Yes. I do not have a Roth IRA because I've never trusted the government. From day one, they said this, put this in law, and I'm thinking they're going to re-niggle on that. That could be the conspiracy theorist in me, and I'm sure I'm going to be wrong about that, as well as Roth IRAs going untouched, and whatever lobby is lobbying for the Roth IRAs will make sure that the politicians don't touch it. You need to be very, very careful out there. Hopefully, the people with Roths currently in place will be grandfathered in under the law, meaning they can't mess with you. Cross your fingers but be careful out there. If someone's trying to pitch you to take your entire Roth IRA and convert it into an entire traditional IRA and convert it into a Roth, my apologies for that. Just step back, think logically, and refer back to this blog.
Do I trust them? Do you trust politicians? The funny part about Roth IRAs is people will say across the board, I don't trust politicians, I don't trust DC, I don't trust anybody. Then all of a sudden, you trust them fully with the Roth IRA conversion. Think about it. I'm worried about you. I'm out here caring for the public and ensuring you're informed. I want to tell you, and I want you to know, why they're so upset, and his name is Peter Thiel. Good for you, Peter, for maximizing the Roth IRA rules to your benefit. That's what this country's all about, playing by the rules.
And with that, check out my podcast, Fun With Annuities. It's fantastic. I have celebrity guests on all the time, and they're brilliant people. We talk about everything from finance to annuities. We have a lot of content out there to educate you. At the end of the day, if you do decide to purchase an annuity, I would love to be the agent and the person that's advising you on that transaction.
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.