Billionaire Peter Thiel is one of the wealthiest people in the world with a net worth of more than $7 billion. Although it is well-known that much of Thiel’s wealth comes from being a risk-taking entrepreneur in the technology industry, it was not as widely known that a significant part of his wealth was a result of smart financial planning. However, a recent report which analyzed data from Thiel’s Roth IRA (Individual Retirement Account) account showed that he had an astounding $5 billion balance. 

How did Thiel do it? 

Of course, everybody is wondering how Thiel amassed such a large amount of capital in his Roth IRA. Thiel actually started with contributing only $2,000 in 1999, the annual limit at that time. He then utilized this contribution to purchase $1,700 of PayPal Holdings which is a firm that Thiel founded. 

Since then, PayPal has become one of the largest financial transaction and payments companies in the world. This resulted in the balance of Thiel’s Roth IRA to skyrocket. Perhaps the best part of all is that thanks to the Roth IRA tax rules, he will be able to withdraw these funds during his retirement years without having to pay any taxes. 

What is a Roth IRA? 

The Roth IRA was named after Senator William Roth of Delaware who was one of the co-sponsors of the law that created the new investment vehicle in 1997. Designed to encourage people to put away money for their retirement years, the Roth IRA provided special tax advantages. 

How does a Roth IRA work? 

Many find the Roth IRA attractive since this type of retirement account allows you to withdraw funds during retirement without incurring any tax liabilities. This is different from a traditional IRA which does not allow you to avoid taxes once you withdraw funds from your account. Instead, the traditional IRA will allow you to contribute pre-tax funds while Roth IRA contributions are taxed upfront before you contribute to the retirement account. 

Roth IRA limits 

Once you start earning a high amount of income you may not be able to continue contributing to your Roth IRA. As of 2021, the annual contribution limit is $6,000 except for those who are 50 years of age or older. In those instances, the limit is $7,000. 

If you earn $140,000 of income per year you are not allowed to contribute to a Roth IRA, according to 2021 legal limitations. The limit is $208,000 of annual income for married couples. 

Is a Roth IRA right for you? 

As you can see, you do not have to be a wealthy technology entrepreneur to benefit from a Roth IRA. However, each person’s circumstances are different which means everybody should have customized family financial planning. Wealth management firms with access to experts in personal finance may be the best equipped to help you decide if a Roth IRA is right for you.


Any opinions are those of the author and not necessarily those of RJFS or Raymond James.  The information contained within this document has been obtained from sources considered to be reliable, but Raymond James does not guarantee the foregoing material is accurate or complete.  Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if you annual Income exceeds certain limits.  Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free.