Do Millionaires Have Roth IRAs? The Surprising Truth About Wealthy Retirement Strategies

Ever wondered if the ultra-wealthy use the same retirement accounts as regular folks? I’ve been researching this question for weeks and what I found might surprise you. Yes, millionaires absolutely do have Roth IRAs—and they’re leveraging them in ways most of us never imagined possible!

By the end of 2022 there were a staggering 280300 Roth IRA millionaires in America. That’s more than the 442,000 401(k) millionaires and 376,000 regular IRA millionaires recorded in 2021’s fourth quarter. But these aren’t just ordinary millionaires playing by the same rules as everyone else.

The Millionaire Roth IRA Advantage

Roth IRAs offer a unique proposition: you contribute after-tax dollars now, but enjoy completely tax-free withdrawals in retirement. This structure makes them incredibly attractive for long-term wealth building—especially for those who expect to be in higher tax brackets later in life.

But wait—aren’t there income limits for Roth IRAs? Yes, and that’s where things get interesting!

For 2023, single filers with modified adjusted gross income (MAGI) exceeding $153,000 and married couples filing jointly with MAGI over $228,000 were ineligible for direct Roth IRA contributions. So how do millionaires get around this?

Secret #1: The Backdoor Roth IRA Strategy

The wealthiest investors use what’s known as the “backdoor Roth IRA” strategy. This completely legal maneuver involves:

1. Contributing to a traditional IRA (which has no income limits)
2. Converting those funds to a Roth IRA shortly after

While this conversion triggers a tax bill on any untaxed contributions and earnings, wealthy individuals often have sophisticated tax planning strategies to minimize this impact. Some even spread conversions across multiple years to avoid jumping into higher tax brackets.

According to the content from The Motley Fool, “First and foremost, know that the vast majority of investors with million-dollar Roth IRAs probably didn’t grow this enormous nest egg within this particular account.”

Secret #2: Exceptional Investment Choices

The second secret of Roth IRA millionaires is their investment strategy. These aren’t people just plodding along with index funds (though that’s not a bad strategy!).

Take Peter Thiel, co-founder of PayPal, who made a sub-$2,000 investment in the startup back in 1999 through his Roth IRA. That stake has grown to an estimated $5 BILLION—all of which can potentially come out tax-free when he withdraws it in retirement.

While most of us don’t have access to groundbreaking startups, the lesson is clear: Roth IRAs are ideal vehicles for investments with the highest growth potential.

As James Brumley noted in The Motley Fool article, “There’s a case to be made for using your Roth IRA to hold high-payoff prospects.”

Secret #3: Strategic Tax Planning

The third secret is all about thinking strategically about taxes. Millionaires aren’t choosing Roth IRAs arbitrarily—they’re doing extensive calculations about future tax scenarios.

Traditional IRAs funded by tax-deductible contributions might actually be smarter if your future income tax liability will be lower than your current one. But millionaires often expect the opposite trajectory.

Most millionaires with seven-figure Roth IRAs have “crunched the numbers as plausibly as they can and have a specific reason for funding this sort of tax-sheltered account rather than a traditional IRA,” according to The Motley Fool.

The Controversy Around “Mega IRAs”

These strategies haven’t gone unnoticed. In 2021, ProPublica published an article exposing how some ultra-wealthy Americans have built “mega IRAs” worth tens or even hundreds of millions of dollars.

A 2021 Senate Finance Committee report revealed about 28,000 taxpayers had IRAs worth at least $5 million. Of the 497 individuals with IRAs worth $25 million or more, the average balance was greater than $150 million!

This has led to criticism that these accounts have strayed far from their original purpose. As the Government Accountability Office (GAO) noted in 2014, “The use of IRAs permits these individuals to accumulate far more in resources, under favorable tax treatment, than may be reasonably necessary to support them in retirement.”

How Millionaires Exploit Roth IRAs

The ultra-wealthy have exploited Roth IRAs in several ways:

1. Sweetheart deals: Buying shares of pre-IPO companies at extremely low valuations
2. Conversions: Moving traditional IRA or 401(k) assets into Roth accounts
3. Special investments: Using self-directed IRAs to invest in alternative assets like private equity or real estate

ProPublica describes the strategy: “Open a Roth with $2,000 or less. Get a sweetheart deal to buy a stake in a startup that has a good chance of one day exploding in value. Pay just fractions of a penny per share, a price low enough to buy huge numbers of shares. Watch as all the gains on that stock—no matter how giant—are shielded from taxes forever.”

Can Regular People Become Roth IRA Millionaires?

The good news? You don’t need to be an uber-wealthy investor to build a significant Roth IRA. With discipline and time, even regular investors can build substantial wealth.

Let’s say you’re 23 years old and contribute $6,000 to a Roth IRA annually for 40 years. Your total contribution would be $240,000. Assuming a 10% average annual return (the historical stock market average), you could potentially reach millionaire status by retirement.

But I’ll be honest—most older investors probably won’t reach the million-dollar mark with just a Roth IRA. There simply aren’t enough years left to make sufficient contributions and let compounding work its magic.

The good news is that you likely have access to a workplace 401(k) plan with much higher contribution limits. When combined with your other investment accounts, becoming a millionaire retiree is still very possible.

Legislative Attempts to Close Loopholes

The government has made several attempts to restrict these practices:

• In 2016, the Senate Finance Committee proposed the Retirement Improvements and Savings Enhancements (RISE) Act, which would have eliminated all Roth IRA conversions
• In 2021, the Biden administration’s Build Back Better framework included provisions to prohibit rollovers of after-tax contributions from traditional to Roth IRAs
• However, these measures weren’t included in the final Inflation Reduction Act of 2022

Currently, backdoor Roth conversions remain legal, though future legislation could change this.

Should You Use a Backdoor Roth IRA?

If your income exceeds the Roth IRA limits, a backdoor conversion might make sense. But there’s one big catch: the Roth conversion tax bite.

When converting traditional IRA assets to a Roth, any untaxed amounts are taxed as ordinary income. This includes pretax contributions and investment gains. If converting large amounts, your tax bill could increase significantly in the year you make the conversion.

Some strategies to manage this:

• Spread conversions across multiple tax years
• If you have a mix of deductible and non-deductible IRAs, consider a “reverse rollover” of pretax funds into your 401(k) if your employer allows it

Key Takeaways for Building Your Own Roth IRA Wealth

Whether you’re already a millionaire or aspiring to become one, here are the key lessons from Roth IRA millionaires:

1. Start early: The power of tax-free compounding is most effective over decades
2. Maximize contributions: Contribute the full amount allowed each year
3. Consider growth investments: Roth IRAs are ideal for high-growth investments since gains are never taxed
4. Use backdoor strategies if needed: High earners can still benefit from Roth IRAs
5. Think strategically about taxes: Consider your current and future tax situations

The Bottom Line

Millionaires definitely have Roth IRAs, and they’re using sophisticated strategies to maximize their benefits. While some of their tactics may be controversial or beyond the reach of average investors, the core principle remains: Roth IRAs offer incredible tax advantages for long-term wealth building.

The key—as always—is to get started as early as possible and stay the course to achieve market-average returns. Over time, consistency and the power of compounding can help even regular investors build significant tax-free retirement wealth.

A “Rich Man’s Roth,” also called a “Rich Person’s Roth,” is not an IRS-defined retirement account like a Roth IRA, but rather a nickname for a specific type of cash value life insurance policy (often an indexed universal life policy or laser fund) designed to provide a tax-advantaged savings and growth vehicle for high-income earners who are ineligible to contribute to a traditional Roth IRA due to income limitations.

There are currently no official statistics on the total number of Roth IRA millionaires, but CNBC reported a record 501,481 IRA-millionaires as of June 30, 2025, a 16% increase from the previous quarter, though this number doesn’t separate traditional and Roth IRAs. Other sources, like Fidelity, have also noted a significant increase in millionaire IRA holders, highlighting the growing success of these retirement accounts.

A Roth IRA may not be worth it for some older individuals if they are in a low tax bracket during retirement and need their money for immediate expenses, or if the tax cost of a Roth conversion is too high. However, for most people, there is no specific age when a Roth IRA becomes “not worth it”.