Mitt Romney, the former Republican presidential nominee, left, greets people after speaking during the Republican National Committee's winter meeting aboard the USS Midway Museum Friday, Jan. 16, 2015, in San Diego. (AP Photo/Gregory Bull)

President Obama will unveil a slew of new taxes targeting the wealthiest Americans in his State of the Union address Tuesday. And there's one person in particular who would be hit extra hard if the policies ever became law: Mitt Romney.

When Romney ran for president in the last election, his financial disclosures served as a fascinating window into how the ultra-rich manage their money very differently from most Americans. Exhibit A: Romney's individual retirement account (IRA), which was worth somewhere between $20.7 million and $101.6 million when he was running for president.

That number shocked a lot of people, since the government allows savers to put in only several thousand dollars a year into your IRA ($6,500 is the current annual maximum). You'd have to be a trading wizard beyond the likes of Warren Buffett to spin such contribution amounts into millions.

In a fact sheet describing the new proposals, the administration never calls out Romney by name, though it does slyly refer to closing loopholes that have enriched "300 extraordinarily wealthy individuals who have accumulated more than $25 million each in IRAs."

Romney never revealed how he did it (there are educated guesses we'll get to in a moment). But the most striking thing about his IRA—aside from the sheer amount—was how much he was saving in taxes.

In a traditional IRA, you can allow your dividends, interest payments and capital gains to grow until you retire without being taxed—a huge advantage compounded over years. You do pay taxes, but only when you make withdrawals during retirement. (In a Roth IRA, you pay taxes up front when you contribute but can withdraw tax free.)

IRAs are a central way for the government to encourage average Americans to save more for their retirement—stashing a few hundred or thousand dollars here or there—with some modest tax savings. The tradeoff is that revenues are lost. But it's a whole other story for the Treasury's coffers when people like Romney start amassing IRA accounts worth millions of dollars.

And this is where Obama's proposal comes in. The idea, which he'll present to the country Tuesday night, is to limit the size of IRA accounts to $3.4 million, which is enough to bring in annual income of $210,000 in retirement, according to the White House. If you hit that amount, you're done—no more contributions or accruing more benefits.

"Tax-preferred retirement plans are intended to help working families save for retirement," said the administration in a fact sheet released Saturday. "But loopholes in the tax system have let some wealthy individuals convert tax-preferred retirement accounts into tax shelters."

The issue has become a priority since it appears that Romney isn't the only American who's been able to build a gargantuan IRA. A recent GAO report found that there were 314 taxpayers with IRAs larger than $25 million in the 2011 tax year. Another 791 had accounts between $10 million and $25 million. As you can see in the table below from the GAO report, that's a far cry from the 98.5 percent of taxpayers whose accounts are less than $1 million.

Bottom line: there's no one using the IRA to better effect than the wealthy. Taxpayers with balances exceeding $1 million, or around 600,000 taxpayers, account for 22 percent of the total balance of IRAs in this country.


Source: GAO

How does anyone amass an IRA worth more than $25 million?

Romney wouldn't share his investing secret when he last ran for president. But the writers of the GAO report and tax experts have a pretty plausible theory. Most simply, these investors have access to assets the average person will never see.

In Romney's case, his investments likely date to his time at Bain Capital, the private equity firm. At the time, Bain had a special type of IRA funded entirely by the company that allowed contributions up to $30,000 a year. If there was a buyout deal that needed financing, Romney could have chosen to value his share of the deal at a low enough amount to put it in his IRA. Then if the deal was a success, the money in the IRA would grow exponentially, with returns far outstripping what a typical investor can get from a mutual fund.

A similar phenomenon is playing out at startups, where a founder can decide that non publicly traded shares of his new company are worth fractions of a penny and put them in an IRA. That's likely how Max Levchin, who helped found Yelp, wound up with 2.7 million shares of Class B common stock in his Roth IRA, according to the company's most recent proxy statement. Yelp's stock price closed Friday at $51.39 per share, making Levchin's Roth IRA worth at least $138 million.

If Obama's tax proposals ever became law, Romney would also get hit by much higher capital gains taxes. According to his 2011 tax return, he earned $6.8 million from capital gains and $3.6 million in interest that year. Obama's plan would increase the top capital gains and dividend rate to 28 percent for couples with incomes over $500,000.

Of course, we don't know how big Romney's IRA account is these days. Or how much he's making in capital gains. But we might soon—if he indeed runs for president. At which point it'll be interesting to see how he responds to policies like the ones being proposed by Obama.

As for Obama, he didn't have much to share Friday when asked whether Romney should run for president again.

"I have no comment," the president said, flashing a grin.