The good news is that there is a legal loophole to circumvent the limit and take advantage of the tax benefits offered by Roth IRAs. Roth IRAs, the kind used by billionaires, work the opposite way. Your income is taxed before it is deposited into your account, but then you won't have to pay taxes on your earnings once you start making withdrawals later in life. For example, a self-directed Roth IRA can hold investments such as real estate, private company stocks, or even investments in IRA Gold Companies, the latter of which is what Thiel held for the first time in his account in 1999, before PayPal went public, according to ProPublica. Even if a self-directed Roth IRA wasn't a good fit for you, you'd still enjoy tax benefits if you invest through a standard Roth IRA.
The financial institution that holds your traditional IRA contributions transfers them directly to the institution that holds your Roth IRA. When your children have “earned income” working for your company or through another job, they can invest in a custodial Roth IRA, allowing the money to grow tax-free. Once the conversion is complete, the money in your Roth IRA becomes subject to the Roth IRA distribution rules.
