100 Million IRAs/401Ks were common among Bain partners

[Dom]

http://articles.boston.com/2012-08-11/news/33138965_1_bain-partners-iras-simplified-employee-pension-plan

The Boston Globe August 11, 2012

Romney built a golden IRA while he was at Bain
His holds up to $100 million; at Bain, ordinary retirement funds found
extraordinary uses

By Michael Kranish and Beth Healy, Globe Staff

<<Romney has not provided details about how his IRA grew so large. But
Romney associates with direct knowledge about the matter said Bain
Capital partners used their IRAs as a pool of investment money,
enabling them to make personal investments in Bain deals, many of
which earned spectacular returns. Much as a lower-dollar investor
might pick mutual funds for an IRA, the Bain partners could make side
investments in the firm's deals and then watch as their retirement
funds grew.

Or exploded, in some cases. For example, in one deal for a credit-
reporting service known as Experian, Bain tripled its $100 million
investment in just seven weeks. This could have resulted in a 40
percent tax on short-term gains for partners who made personal
investments in that deal. But by using funds within an IRA to make the
investment, Bain partners would not have to pay any tax on their
personal stake until the funds are withdrawn upon retirement. While
Romney has not said whether he used the IRA in that particular deal,
his associates said the practice was widely used at Bain.

The short-term capital gain profits "could have been taxed at 40
percent and were instead taxed at zero," one Romney associate said,
referring to tax rates in effect at the time of the 1996 Experian
deal. In many other cases, where longer-term gains could have been
taxed at a lower rate, they similarly would not have been subject to a
tax until the funds were withdrawn. The cumulative effect - with
profits from each success reinvested in the next deal - helps explain
how Romney's IRA could have grown so large, according to his
associates.>>