It's not insurmountable. Do you need to be mindful of self-dealing regulations? Of course. However, there are many investment opportunities available to non-wealthy people which can be pursued via self-directed ROTHs and LLCs owned by them. Real estate (financing, bridge financing, rental ownership, distressed property flipping, etc...) is probably the most commonly used one I've seen IRL but I've still seen it used for investing in friends and family rounds of startups, etc...
It's certainly not a "yolo do whatever you want, the IRS won't care" fund but it is still available to the non-wealthy. I know many people who have been making use of it for years without any unfair government characterization or attention. The best I've personally seen is a couple in their early 30s with ~$7 million (real estate related dealings) in their self-directed roth which is a far cry from $5 billion, obviously, but pretty amazing nonetheless.
The article is scant on details, but based on the few data points it throws out and the historic contribution limits, Thiel achieved an average annual return of at least 79% over 22 years. I'm guessing the way he did that is investing tiny amounts of Roth money into very early pre-seed rounds at vanishingly small valuations due to uncertain future prospects, and then making those prospects much more certain by following on with larger taxable investments. Heck if the earlier investment was a senior convertible note, he could probably get his Roth investment back even if the startup ultimately failed down the line.
So no, you're not going to get those kind of gains with real estate. It relies on early stage startups being notoriously hard to value, plus the wealth/connections to make for surefire exits. And if you tried to replicate it at an individual or even familial level, especially repeatedly, those early valuations are going to end up getting challenged. So sure, the same laws apply to everybody and anybody can set up a self-directed IRA. But not everybody can predictably and sustainably achieve such outsized gains with them.
> Do you need to be mindful of self-dealing regulations? Of course. However, there are many investment opportunities available to non-wealthy people which can be pursued via self-directed ROTHs and LLCs owned by them.
The very fact that you're having to be "mindful" of self-dealing shows that people like Thiel are self-dealing, just with more layers of indirection.
If it wasn't self-dealing, you'd not need to be mindful of such regulation.
It's certainly not a "yolo do whatever you want, the IRS won't care" fund but it is still available to the non-wealthy. I know many people who have been making use of it for years without any unfair government characterization or attention. The best I've personally seen is a couple in their early 30s with ~$7 million (real estate related dealings) in their self-directed roth which is a far cry from $5 billion, obviously, but pretty amazing nonetheless.