Individual Retirement Accounts – or IRAs – are an important part of retirement savings plans in the U.S. The average IRA account balance depends, of course, on the account holder’s age and the number of years he or she has made contributions. Twenty-somethings, for example – who haven’t yet had the benefit of time – have about $13,000, on average, socked away in IRAs. People in their early 60s and approaching retirement age, on the other hand, have balances closer to $165,000. (Read our tutorial: Traditional IRAs.)

The average IRA account balance – without taking age into consideration – is about $120,000. Still, an estimated 314 IRAs out there, according to a 2014 study (the most recent available) from the Government Accountability Office (GAO), boast balances greater than $25 million. There’s also at least one person – 2012 Republican presidential candidate Mitt Romney – who, according to public disclosures required to run for public office, has more than $100 million in a self-directed IRA. (For more on this type of IRA, see Self-Directed IRA: The Right Move for You?) With an annual IRA contribution limit of $5,500 for people under age 50, how is that even possible?

The Exception, Not the Norm

First of all, it’s important to note that IRAs valued at $25 million – or in Mitt Romney’s case, $100 million – are extraordinarily rare. The estimated 314 accounts greater than $25 million are from a pool of about 43 million IRAs. In other words, fewer than 0.0007% of all IRAs are valued that high. Even the next lower balance analyzed by the GAO – IRAs between $10 million and $25 million – still represent a very small segment of the IRA population as a whole (791 accounts, or 0.0018%). The vast majority of IRAs – about 98.4% – have balances of $1 million or less.

Best Case Scenario – for Most of Us

Let’s assume you started retirement planning early and made the maximum annual contribution to an IRA every year for 50 years (for simplicity’s sake, we’ll say that’s $5,500 a year) and your investments grew at 8% a year (a conservative estimate, and less than the 10% average return for the S&P 500). After 50 years, your IRA would be worth about $3.4 million, which is enough money for most people to retire comfortably (and a great reason to start – and make regular contributions to – an IRA sooner, rather than later).

According to the GAO study, in order to accumulate a balance much larger than that, you would need large individual and employer contributions sustained over decades and rolled over from an employer plan (this works because there is no limit on IRA accumulations or rollovers from employer defined-contribution plans). It also helps if you can invest in assets that are unavailable to most investors – as Romney did.

How Romney Did It

Romney used a SEP IRA, a retirement plan that an employer or self-employed individual can establish, and one that has a much higher contribution limit of up to $54,000 per year (for 2017), depending on income. (See our SEP IRAs Tutorial for more.) Even with higher-than-average returns, a “typical” SEP IRA would come nowhere near Romney’s $100 million balance. So how did Romney do it? Is he just that great an investor?

According to a 2012 story by William D. Cohan that appeared in The Atlantic, “The truth about Romney’s IRA is that its massive size has very little to do with choosing the right investments and a lot more to do with the alchemy of the private-equity business itself and the opportunities that come out of that insular world for people like Romney, who was the founder and chief executive of Bain Capital for at least 15 years.”

Instead of choosing winning investments, Romney likely used carried interest – something most Americans don’t have access to – to grow his IRA to supersized proportions. As a general partner of Bain, he would have been able to put up a small fraction of the equity needed for a buyout and then reap 20% of the profits (the standard for carried interest) if the deal went well.

Hypothetically, Romney’s initial investment – say, $30,000 from his IRA – could have easily turned into tens of millions of dollars in carried interest from one large deal. He could then use those millions – along with his $30,000 contribution each year – to invest in more Bain Capital deals, and it wouldn’t take long to build a $100+ million account.

The Bottom Line

When it comes to taxes, supersized IRAs are at a disadvantage: Withdrawals from a traditional IRA or SEP IRA (among other types of IRAs) are taxed at your current tax rate, and not the capital gains rate. For Romney, it would likely mean the difference between paying the 20% capital gains tax (the max rate for 2017) and the 39.6% ordinary income tax rate for his highest-tier tax bracket – a huge difference in taxes. However, for Romney (and others), it would seem to be a gamble that worked out in his favor because he had decades to grow a very large IRA tax-free, which could more than make up for the higher taxes on withdrawals.

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