I’m a registered independent…
And I’ve voted for Democrats and Republicans in the past.
So, please understand, I’m not writing a “hit piece” today.
But I recently made a disturbing discovery:
Buried inside an 881-page bill from the Biden White House is a proposal for a new law, and this law could have a dramatic impact on your wealth.
Today, I’ll reveal the details — and I’ll explain what you can do to protect yourself.
Main Street’s Retirement Account
Before I reveal the details of this new bill, first let me explain how it’ll impact you.
Simply put, this bill could dramatically impact your retirement.
You see, when it comes to saving for retirement, Main Street investors have two main options: the 401(k) account and the IRA.
Both accounts allow you to grow your wealth essentially tax-free until you retire.
The 401(k) is a great option, but it has to be sponsored by your employer. So if you don’t work for a company with a 401(k) plan, this option is off-limits to you.
Which is why many Americans set up an IRA, or Individual Retirement Account…
You can set up an IRA on your own, and your contributions are tax deductible. On top of that, the profits it generates accumulate tax-free until you reach retirement age. After that, any money you withdraw is taxed at your current income-tax rate, which is typically a far lower rate than what you were paying during your working years.
This has made IRAs an extremely popular savings option for millions of Americans.
In fact, today, there are over $13 trillion in assets invested in IRAs.
“Alternative” Ways to Profit
Now, when most folks think about investing through their IRA, they think about traditional investments like stocks, bonds and mutual funds.
But here’s the thing:
Your IRA isn’t limited to traditional investments…
You can actually invest in almost any asset class…
And that includes “alternative” assets like private equity, cryptocurrencies, and startups.
Now, that might not sound like a big deal. But when you look at the historical returns of some of these alternatives, you can see why investing in them through a tax-free vehicle like an IRA might be very compelling…
Triple Your Gains
For example, startup investments have historically generated returns of roughly 55% per year.
So let’s say you have a portfolio of startups and you’re earning roughly 55% year… and on average, you pay 25% in taxes on your profits.
That would take your net returns down to roughly 40% per year.
So basically, if you invested $10,000 into a basket of startups over 10 years, you’d be sitting on roughly $289,000.
That’s a great return — but now let’s see how much you’d have earned if you’d invested through your IRA, instead:
Instead of earning $289,000 over 10 years, you’d have made over $800,000…
That nearly triples your profits!
Stealing Your Wealth
As you can see, using your IRA to invest in alternative assets like startups could have a big impact on your retirement…
However, if the White House has its way, that extra wealth creation might soon disappear.
You see, buried in Section 138312, on page 689 of the new Reconciliation Bill from the House Ways and Means Committee, is a proposal that would eliminate your ability to invest in alternative assets through your IRA. (You can read the full bill here if you’re curious.)
Why would it do such a thing?
Well, the administration believes that by eliminating private assets from IRAs, it can prevent ultra-wealthy investors from shielding profits in their retirement accounts.
But what it doesn’t seem to understand is that alternative assets have become more mainstream nowadays…
In fact, millions of everyday investors like you are now actively investing in alternatives like cryptos and startups.
So this bill wouldn’t just tax the rich — it’ll tax Main Street investors like you, too!
What’s the Solution?
As famed startup investor Fred Wilson recently wrote, there’s an easy fix to the problem:
“… limit the tax advantages of an IRA to a set amount of money, something like single-digit millions. That will limit their attractiveness as a tax shield for millionaires but maintain them as a wealth generator for everyone else.”
I believe this makes a lot of sense. It would help accomplish the government’s goals, as well as the goals of investors like you.
Which is why I’d encourage you to reach out to your elected officials and let them know that Section 138312 of the Reconciliation Bill is a bad idea.
It would hurt Main Street investors considerably more than it would hurt the rich.
Best Regards,
Founder
Crowdability.com
