Originally Posted by Buehler445:
Great stuff. Thanks Rain.
I could be wrong, but I THINK that's true of 529s broadly, so dig into Kansas's program as well. If so, you'll almost certainly be better off taking advantage of the state tax savings. [Reply]
Originally Posted by Buehler445:
So my kids (3 and 7) are getting some reasonable amounts of cash built up in their savings accounts.
I tossed it to the wife that maybe we should start a Roth for the kids, even if they don't put any more in it until after college, they should have serious gains and a hell of a head start. She wasn't thrilled about the idea, thinking they couldn't get it out if they needed it. After 5 years they should be able to borrow the basis. Plus, I think there is some value in the fact there are barriers to exit. If my kids suck (hey, my sister exists), and I can't pass on anything, they'll still have something come retirement.
Anybody have any thoughts on this?
You cannot start a Roth for your kids unless they have earned employment income, so that’s out at their age. 529 plans are intriguing assuming they are utilized for educational purposes. I like the idea of doing a taxable brokerage account for them and allowing them the flexibility to work with you in selecting their investments, etc. You can use that as a good way to educate them on selecting tax favorable investments since it is a brokerage account as opposed to a Roth or Traditional IRA or 529 plan. [Reply]
Originally Posted by DaFace:
I could be wrong, but I THINK that's true of 529s broadly, so dig into Kansas's program as well. If so, you'll almost certainly be better off taking advantage of the state tax savings.
I’ll look but I don’t think so. Because Kansas. [Reply]
When my dad passed away 4 years ago I inherited a portion of an IRA he had. I'm pretty sure it was in his trust. Maybe you could go a similar route. I owe no tax unless I take money out of it which I'm supposed to take a certain amount out every year and it's taxed. People here know a lot more than I do but it's something you could look into. [Reply]
Originally Posted by Hog's Gone Fishin:
Can't you just get it into an ETF to start compounding until you decide. Then you can roll it into a Roth or a 529 when they start working
That's probably what I'll do. If I roll it into a Roth, I'll have to pay attention to the tax for the varmints for the year. [Reply]
Fidelity has a kids ROTH IRA that doesn't have to have earned income. I started one for all four of my kids last month. They're putting their birthday, Christmas $, etc into it.
Fidelity specifically states you don't have to have earned income as long as it makes a sense. Now the kids are coming up with $20 here and there wanting to invest it in their accounts and watch it grow.
The ROTH IRA has to be transferred to them on on their 18th bd. [Reply]
We started a 529 plan for our kids in 200 and 2002. They’ve gained about 50% on the steady inputs over 18 years. They’re in college now and paying all the costs from that account sure feels good. [Reply]
Originally Posted by wutamess:
Fidelity has a kids ROTH IRA that doesn't have to have earned income. I started one for all four of my kids last month. They're putting their birthday, Christmas $, etc into it.
Fidelity specifically states you don't have to have earned income as long as it makes a sense. Now the kids are coming up with $20 here and there wanting to invest it in their accounts and watch it grow.
The ROTH IRA has to be transferred to them on on their 18th bd.
Originally Posted by wutamess:
I knew I was treading lightly. That's true but the way I understood it was they don't have to file taxes so just keep records of the income they made.
Win-win for all.
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Correct that a dependent minor doesn't have to file taxes unless they earn more than 12.4k.
For those interested, allowance does not count as earned income. Earned income is defined by the IRS as money earned from a W-2 job, or from self-employment like babysitting. [Reply]