Hamilton Capital Partners | Atlanta, GA — Hamilton Capital Partners

The Roth IRA Saga

Good morning and happy Friday!

The recent frenzy regarding Roth IRA’s has been centered around Peter Thiel and his purchase of nearly 2 million shares of PayPal in 1999. Yes, his initial $2,000 investment turned into $5,000,000,000.00 (billion). What is unclear is whether or not Thiel bought the shares below market value, which could potentially void some of his non-taxable earnings.

We wanted to provide a no non-sense overview of Roth IRA’s below.

Unlike a traditional IRA, a Roth IRA allows your investments to grow tax free. Roth contributions allow for tax free withdrawals of principal and in certain cases, tax-free withdrawals of earnings.

To draw earnings tax free, an account holder must meet the following: 

1) Maintain the account for 5 years

2) Reach age 59 1/2 (subject to change)

3) Become disabled

4) Draw funds for first time home purchase

For 2021, the maximum contribution to Roth IRA’s is $6,000. This number jumps to $7,000 if you are 50 or over.

Have a great weekend!

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