(Bloomberg) — The most mysterious of the unexplained mysteries about Mitt Romney’s considerable wealth is how he was able to amass between
How did he do it, given the relatively small amounts that the law permits to be contributed to such a plan on an annual basis? Romney has not explained this conundrum, and seeing as he wants to become president, he would be wise to start talking — if for no other reason than there might be many Americans who would like to emulate what he did.
During Romney’s tenure at
While there are limits to the amount that can be contributed tax-deferred to an IRA, there are no restrictions on the amount of money that the contributed capital can earn and can continue to earn, on a tax-deferred basis, even after the contributions have stopped. (The
So how did Romney do it? Of course, we don’t know, but there have been several theories propagated to fill the considerable gap in knowledge left by Romney’s ongoing silence.
For instance, after Bain bought Domino’s Pizza in 1998 for
If Romney put
Of course, not every deal Bain did worked out. But let’s say Romney was prescient and put into this hypothetical IRA only the stock of the buyout companies that did well, returning to investors a whopping 10 times their money. (This is very rare but conceivable.) Even so, that would turn Romney’s
This great mystery seems to have troubled others, as well. On
The other possibility, Kleinbard suggested, was not dissimilar to what Maremont theorized: that Romney contributed limited-partnership interests in Bain’s buyouts to his IRA. What was “quite troubling” to Kleinbard is that he suspected Romney may have contributed these interests to his IRA at a fraction of their market value — “pennies on the dollar” — and well below what he might have charged you or me. When the buyouts became successful, Kleinbard proposed, the pennies on the dollar were suddenly worth real dollars.
“What’s very frustrating to me about all this is that we can only talk in abstractions and generalities because, again, of the lack of disclosure,” Kleinbard said.
Without mentioning the heroics Romney has accomplished in his IRA,
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