Can you detail the immorality?
> To close the loophole, putting private shares into a Roth IRA should be banned because they have no true market price that indicates their worth.
Why should they be banned? Everything has a price. IIRC, in a self-directed IRA you can put anything... paintings, gold, collectibles, houses. Why not random shares?
I see a huge problem here. Roth IRAs were made with certain guarantees. That some people would make outsized returns in a country of almost 400 million should be expected. Why do we find it necessary to then go and 'get our fair share'? Didn't we already set the rules? Why must we now change them since some guy got lucky?
Ideally, we should just say 'good job Mr Thiel', you held up your end of the bargain and we'll hold up ours. The deal was already struck. This is why no one trusts the American government.
Also, I'd point out that the roth IRA mentioned here is only nominally worth $5b. If he were to sell all the shares there would likely be a huge drop in price. Either way, what goes unmentioned is that the $5b wouldn't be taxed anyway if it was all in unrealized capital gains.
The stock had no true market price because there was no market: at that point, the shares could not be sold to outsiders, so there were no willing buyers or sellers to set a price.
Morality is relative. You can't legally police other people based on your personal morality. To me, morality is maximizing your self-benefit, so there's nothing wrong with what Thiel did. If other people disagree, then there are plenty of avenues to campaign for outlawing what he did.
Private companies that are raising money have a valuation on them done periodically ("409A valuation"), and this is what private stock options and common shares are based on. This is the IRS's own rules.
The point of the Roth IRA is to encourage middle and lower class people to invest in their retirement by offering a tax incentive. But to avoid being abused by the rich the total yearly contribution limit is set very low. Thiel avoided this limit by simply selling himself a huge amount of stock for fractions of a penny on the dollar, knowing the actual price on the open market would be far higher. However, nobody can prove that the price of the private share would have been higher at the time because they weren't on a market.
It would be like if you were trying to avoid taxes by selling your 1,000 acre mansion to a LLC that you own for $1 and paying the tax on that $1. This doesn't work for real estate, but the Roth IRA system is not as sophisticated so you can get away with it.
This approach will just leave you surprised in the 2040s about what anybody with reading comprehension skills is doing in 2020s.
Also greater private equity access was just expanded in the tax code for tax deferred roth products. So the opposite is happening.
It was the valuation at the time and there is nothing illegal about that. You can invest your Roth in penny stocks or sub penny stocks today if you want.
The real question is if it was legal to purchase stocks in a company he also managed.
For a valuation, there has to be a market and a market clearing price. If there is no market (no buyers and sellers), valuation is meaningless.
I would personally ban non-public investments in Roth IRAs. That way a debate about market value doesn't have to happen.
If you make a smart or lucky in somebody else's company, bitcoin, or whatever, it isn't an exploit, it is the point.
The funny thing is, there is never any verbal defense - just downvotes.
However this seems quite shady. The rich should still have to pay taxes.
More general I'd say Peter Thiel is both loved and hated and everything in between on HN, there is no real consensus.