A deft maneuver back in 2012 enabled employees to invest in RenTech’s storied Medallion Fund via individual retirement accounts, or IRAs, which provide tax benefits for millions of ordinary Americans savers who are putting money aside for their golden years.

The gains stemmed from Renaissance’s ability to capitalize on a key rule change involving a type of retirement account known as a Roth IRA, where assets can appreciate tax-free after an initial levy is paid. In contrast, taxes on traditional IRAs are deferred until retirement, a structure that permits the government to take its cut on decades of potential investment gains.

‘A Slam-Dunk’

By paying the tax upfront through a Roth, Renaissance employees could then fully reap Medallion’s astronomical returns tax-free from then on. This was particularly valuable in Medallion’s case because the fund’s profits areoften generated through short-term trading and thus subject to top tax rates.

“It was a slam-dunk investment for all the employees,” said JoshLichtenstein, a partner in tax and benefits at Ropes & Gray.

Jonathan Gasthalter, an outside spokesman for East Setauket, New York-based Renaissance, declined to comment. […]