Roth IRA

[parth.desai32]

I am 16 years old and I work at country club in GA. I am currently working about 8-9 hours and I put all of the paychecks I get into the Roth IRA. But people also tip me a lot so I was wondering if I could put that extra cash into the Roth even though it doesn't go into my W2 at the end of each year. Please help me out

[xerty24]

Just make sure you don't contribute more to your Roth IRA than you have earned income reported on your taxes. Earned income includes both your W2 and the tips you that you report.

[Majormajor78]

You are supposed to file for your tips that are not included in your W-2. If you claim your tips and then stick the money into a traditional IRA you can turn right around and deduct this value from your income. It sounds like you could get out of paying almost anything on your taxes.

[Dale_G]

Congratulations on developing a savings habit early Parth.

As Majormajor78 points out, if you are in danger of paying income taxes, you can contribute some money to a traditional IRA - otherwise stick to the Roth.

You will pay FICA and Medicare taxes on your tip income. So be it, we mature folks need your support

Keep on saving, you will not regret it.

Dale

[White Coat Investor]

You're supposed to report and pay taxes on the tips. I suggest you start.

Second, you're 16. How about you spend the money you make and your dad matches it in a Roth IRA?

[Dale_G]

You're supposed to report and pay taxes on the tips. I suggest you start.

Second, you're 16. How about you spend the money you make and your dad matches it in a Roth IRA?

I agree 100% with EmergDoc, but in certain circles he would be accused of corrupting youth in both statements

Dale

[BruceM]

And make sure the total of all your contributions for a given calendar year does not exceed $5,000

BruceM

[larmewar]

How about saving in taxable to invest in your future, e.g. college education, so won't always be working at the golf club? Or is thatalready taken care of?

Lar

[Spades]

Parth,

I had the same issue when I was working at Sonic. If you want to put the money from the tips into your roth, you have to put it on your taxes. I just helped a friend with the IRS after they over contributed it and didn't realize until after they had earnings on it. It's a tiring process to fix that.

I would recommend putting some into a taxable account for a car, college, emergency fund. You never know when you'll want to drop 1k on something after highschool, and if yall of your portfolio is in the roth, then you're up a creek and can't access that money. 8)

[Bob's not my name]

if all of your portfolio is in the Roth, then you're up a creek and can't access that money.

Since when?

[2beachcombers]

Smart guy--hope you are in Savannah

[Grt2bOutdoors]

I am 16 years old and I work at country club in GA. I am currently working about 8-9 hours and I put all of the paychecks I get into the Roth IRA. But people also tip me a lot so I was wondering if I could put that extra cash into the Roth even though it doesn't go into my W2 at the end of each year. Please help me out

Place all of your wage income (reported W-2) into the ROTH, up to $5K - if you feel comfortable with it. As for the tip income, income that is not reported to the gubermint either through W-2 or end of year tax filing (read: Form 1040) can not be deposited in an IRA - be it ROTH or Tax Deductible IRA. Put the extra cash, assuming you have an emergency savings account or similiar vehicle and would like to invest it in the Vanguard Total Stock Market Index or the Vanguard STAR ($1K minimum, highly diversified, good track record). Or, bank most of the cash and go buy yourself an ice cream soda.

[jmbkb4]

What are you buying in your Roth, OP?

[Gill]

As for the tip income, income that is not reported to the gubermint either through W-2 or end of year tax filing (read: Form 1040) can not be deposited in an IRA - be it ROTH or Tax Deductible IRA.

Of, course this statement doesn't apply to the OP because he will report all of his tip income on his tax return as required by law.
Bruce

[jpsfranks]

Good job. I did not know what a Roth IRA was until I was 24 or so.

Having recently hit 30, suddenly everywhere I see evidence that I am not as young as I used to be. That bogleheads.org has posters almost half my age does not help in that regard.

[scouter]

You're really on the right track at age 16. If i were you, I would keep it simple by putting your wage income into your ROTH-IRA, and saving your tips in a savings or money market account for future goals, like buying a car.

By the way, you sound like a future millionaire to me!

[jmbkb4]

Good job. I did not know what a Roth IRA was until I was 24 or so.

Having recently hit 30, suddenly everywhere I see evidence that I am not as young as I used to be. That bogleheads.org has posters almost half my age does not help in that regard.

:lol: :lol:

me too.

[Default User BR]

if yall of your portfolio is in the roth, then you're up a creek and can't access that money.

That's a common misconception. You can withdraw the contributions from a Roth at any time without tax or penalty.



Brian

[Spades]

Ah, I didn't know that about withdrawing contribution amounts without penalties.