In 1999, Peter Thiel put roughly $2,000 into a Roth IRA and used it to buy founder shares of a company called PayPal, reportedly for a fraction of a cent apiece — under $0.001 a share by some accounts. Two decades, one Facebook stake, and one Palantir position later, that account was reportedly worth $5 billion. Under US law, when he eventually draws it down, he owes federal tax on none of it.

A Cent a Share, Compounded

The Roth IRA was designed for a nurse or a schoolteacher putting aside a few thousand dollars a year. The annual contribution limit today is around $7,000 to $8,000, depending on age. Growth inside the account is tax-free. Qualified withdrawals are tax-free. That's the whole design, and it works exactly the same way whether the account holds an index fund or, as Thiel's did, pre-IPO stock in a company nobody outside Palo Alto had heard of yet.

Most people can't buy private company shares inside an IRA, because most brokerages won't let them try. Thiel used a self-directed IRA, a version that can hold real estate, private equity, and founder stock, provided the custodian allows it and the paperwork is clean. He put PayPal shares in at their earliest, cheapest valuation, and let three decades of compounding do work no contribution limit could touch.

Self-directed IRAs carry an extra layer most custodians warn clients about long before it becomes a headline: prohibited-transaction rules, which restrict how directly an account holder's own position at a company can shape what their retirement account pays to buy into it. That's general background, not a specific finding against Thiel. But it's the backdrop against which the valuation questions below actually matter.

Why Tax Lawyers Still Argue About the Valuation

The mechanics were legal, and no fraud has been alleged against Thiel. But the valuation itself has not sat quietly. ProPublica's 2021 investigation into the account, built from Thiel's own IRS and custodian records, reported that tax law professor Victor Fleischer called buying founder shares at $0.001 through a Roth "indefensible" and "a huge scandal." A Seattle tax attorney told the same reporters he'd advise clients against it, because of the risk the IRS would later argue the shares were undervalued at purchase. The account was audited by the IRS in 2011. A 2014 Government Accountability Office report, reviewing IRA practices more broadly, warned that grossly undervaluing assets at the point of purchase can let contribution limits be circumvented entirely — precisely the pattern critics point to here.

None of that has produced a fraud finding, a settlement, or a conviction. It has produced an open, unresolved argument among tax professionals about whether transactions like this one should stand. Worth knowing before anyone reads "Peter Thiel did it" as a plan.

The Part Nobody Else Can Copy

Even setting the valuation question aside, the math only works if you found a company that becomes worth tens of billions of dollars and hold founder-level equity in it from day one. A schoolteacher maxing out a Roth IRA every year for forty years will retire comfortable, not with $5 billion. The lesson that scales down isn't "buy shares for a tenth of a cent." It's "use the tax-advantaged account you're allowed, and don't leave it holding only what the default settings gave it."

A Passport That Needed No Valuation at All

Thiel's other headline-making move used no clever structuring whatsoever. In 2011, he was granted New Zealand citizenship under a discretionary "exceptional circumstances" provision, a ministerial path that doesn't require the years of physical presence ordinary applicants need. The grant became controversial in New Zealand once it became public in 2017: he had spent limited time in the country relative to typical residency expectations, and he holds substantial New Zealand real estate. Nothing about the grant has been found unlawful. It was, and remains, a legitimate citizenship under New Zealand law, just a rare and politically uncomfortable one.

Most people weighing New Zealand as a second-country option don't have that route available, and shouldn't plan around it.

• Exceptional-circumstances citizenship (Thiel's route)
  What it takes: Ministerial discretion, no fixed presence requirement
  How common: Very rare

• Investor visa
  What it takes: Several million NZD invested, standard years-long path to residency and citizenship
  How common: The realistic route for most HNW applicants

• Citizenship elsewhere by investment (Caribbean states, Malta, Turkey)
  What it takes: Direct investment, faster issuance, no NZ ties required
  How common: Common alternative when NZ isn't feasible

The Version Everyone Else Gets

Almost no FTR client will ever hold pre-IPO founder stock inside a retirement account, and fewer still will be offered citizenship by ministerial discretion. But both of Thiel's moves reduce to something more ordinary: use the tax-advantaged accounts you're legally entitled to for more than the default fund menu, and treat a second set of legal ties to another country as real infrastructure, not a backup plan you'll get around to eventually. Most people who build genuine residency elsewhere do it the investor-visa or skilled-migration way, slower than a ministerial grant, but available to more than one person on earth.

Neither move requires anyone's permission beyond the custodian's and the immigration authority's, and neither requires being a billionaire first. It requires knowing the accounts and the channels exist, which is precisely the part most people skip.

If you're sitting on an old 401(k) or IRA that's never held anything but the default target-date fund, or you've been meaning to look seriously at a second residency instead of just bookmarking articles about one, that's a conversation worth having before either decision gets made by default. Book a scoping call and bring your actual account statements — we'll tell you what's realistically available, not what a headline made it sound like.

This article describes public reporting on Peter Thiel's finances and citizenship and is not personal tax, legal, or immigration advice for your situation.