• John

Everyone Should Open a Roth IRA if Qualified

Updated: Dec 18, 2021

Disclaimer : Anything mentioned in this post is not financial advice and is for informational purposes only. We do not recommend buying or selling any securities that are mentioned in this article. All investments carry risk and there is no guarantee of profit nor protection against loss. WealthGap does not provide any legal, tax, or accounting advice.


An IRA is a tax advantaged investment account for individuals to invest for retirement. There are different kinds of IRAs but I will only focus on Roth today because it is the best IRA in existence. A Roth IRA allows an individual to fund the account with after tax money and when you withdraw money from your Roth IRA account you don't have to pay any taxes when you turn 59.5. If you want to withdraw money before you are 59.5, you can withdraw the principal you contributed (not the gains) tax free. I will not go into all the little details of the rules, if you want to read more about Roth IRAs you can click here. (Quick note: You cannot contribute to a Roth IRA if you make over ~$140,000 in 2021 as a single person and over ~$200,000 if you are married and file jointly. However, WealthGap can help you legally "backdoor" into a Roth IRA even if your income doesn't qualify. )

Billionaire Doesn't Pay a Dollar in Taxes For his 5 Billion Roth IRA Account

Billionaire Peter Thiel took the most advantage out of a Roth IRA account and compounded the funds to 5 billion dollars in 2021. Guess what, he doesn't have to pay a cent when he turns 59.5 and withdraws money from the account. Please don't hate on him because everything he did was totally legal and he was just taking advantage of the power of tax free investing with a Roth IRA account. Moreover, he's a smart investor and he chose his investments wisely so his account balance ballooned to 5 billion. Smart people should be rewarded with wealth when they make educated investment decisions. Those who say these billionaires should pay taxes are just losers who don't advantage of the tax code. If you were in their shoes, would you voluntarily pay taxes when you are not legally required to do so? I never understood why Warren Buffett paid himself a salary of $100,000 until I found out about Roth IRAs. He was deliberately controlling his income so he can qualify for a Roth IRA and thus can utilize the account to invest tax free. The beauty of a Roth is that you don't get taxed on dividends and gains and so you can freely sell a position and invest in another great opportunity tax free when you execute the sale. Roth IRA is the best investment vehicle ever invented for Americans.

Anyone Who Qualifies Should Open a Roth IRA

Since you contribute after tax money into a Roth IRA, you won't get taxed a second time when you withdraw the principal out (not gains unless you turn 59.5). Therefore, everyone who meets the income requirement should invest the maximum amount permissible by law every year into his Roth IRA. It is a no brainer. If you need money in an emergency you can always withdraw your contributions tax free. WealthGap offers Roth IRAs and you can download our app here. If you don't qualify for Roth, WealthGap can help you "backdoor" into one legally.

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