This article highlights what I hate about financial reporting. Take this quote "If you are expecting to earn a rate of return of 20 percent or higher, it turns out to be a really good tax shelter." Or this one "The difference: ordinary people don’t have access to Medallion, one of the most successful hedge funds of all time."
It's basically insinuating that the techniques Renaissance used are somehow unfair because Medallion has such high returns, as if those returns were anointed by God instead of the work of the people at the fund. In addition, it insinuates that those high returns will go on forever - well, there have been more than few money managers who have seen their years of overperformance decimated by 1 or 2 bad years.
It's fine to argue that a Roth IRA may not be good tax policy for the country, but the only thing "special" about Renaissance is they appear to be better at investing than most of their peers.
No, they also have created legal advantages for their employees that aren't available to most people. E.g. I cannot do any margin trades in my IRA and am subject to settlement rules if I try to do day trading. Additionally, if I founded my own startup I would not be able to invest my Roth IRA money in it and let it grow tax free.
Your lawyer was wrong, then. If you look around, you'll find coverage of people successfully doing their startup shares in their Roth IRA, and I know one billionaire personally who did that.
It’s a facts and circumstances thing. Yes, it’s possible to do. It’s not possible in some circumstances. (Not possible for S-Corp, not possible if the company will be buying assets [inc IP] from the IRA holder, probably not possible if the company isn’t profitable enough to pay a salary from operations [you can’t work for free for your IRA holding, it’s legally risky to use your IRA to funnel you current salary], etc)
GP’s lawyer could very well have been right in advising that GP couldn’t do it under that specific set of facts.
> It's basically insinuating that the techniques Renaissance used are somehow unfair because Medallion has such high returns, as if those returns were anointed by God instead of the work of the people at the fund
The general assumption I've heard from friends in the industry -- which may be justified or may not be, I am certainly not qualified to say -- is that they're juicing the Medallion fund with returns from their other funds, they're just using clever trading mechanisms to effectively "launder" what would otherwise be highly illegal transactions.
The advertising mileage they get out of Medallion alone would probably make the activity worthwhile, but I'm sure the tax-free income from the Roth IRAs doesn't hurt either.
It's basically insinuating that the techniques Renaissance used are somehow unfair because Medallion has such high returns, as if those returns were anointed by God instead of the work of the people at the fund. In addition, it insinuates that those high returns will go on forever - well, there have been more than few money managers who have seen their years of overperformance decimated by 1 or 2 bad years.
It's fine to argue that a Roth IRA may not be good tax policy for the country, but the only thing "special" about Renaissance is they appear to be better at investing than most of their peers.