Roth IRA for children

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JimmyJim
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Roth IRA for children

Post by JimmyJim »

Has anyone opened a Roth for their children? Seems like a really good idea to me. Kids are working (ref. games) in my town, and finally have some earned income. Anyone know why the initial amount to open a Vanguard Roth account is so high? I know 1,000 is a drop in the bucket to most people, but if our government wants Americans to save for retirement, shouldn't they try and make the initial amount much less? All this talk these days about 401k's....and it got me thinking.

Just saw Fidelity has one that doesn't have a minimum to open an account. Link is below. I guess, I'll just save and try and open at Vanguard so all of us are in one place.

https://www.fidelity.com/retirement-ira ... f=99999999

Do you think I could open this and then transfer to Vanguard when it reaches 1,000?

Thanks-
Jim
letsgobobby
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Re: ROTH IRA for children

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oldcomputerguy
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Re: ROTH IRA for children

Post by oldcomputerguy »

I think (and if I'm wrong I'm sure someone will correct me) that there is no minimum simply to open the account. The $1000 minimum is the minimum to invest in a Target Retirement Fund. But as far as I know there's nothing that prevents one from opening the account, funding it nickel-and-dime along (with the money going into the settlement account), and when it reaches minimum investing it in a fund.
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Re: ROTH IRA for children

Post by CyclingDuo »

JimmyJim wrote: Sat Oct 28, 2017 8:55 am Has anyone opened a Roth for their children? Seems like a really good idea to me. Kids are working (ref. games) in my town, and finally have some earned income. Anyone know why the initial amount to open a Vanguard Roth account is so high? I know 1,000 is a drop in the bucket to most people, but if our government wants Americans to save for retirement, shouldn't they try and make the initial amount much less? All this talk these days about 401k's....and it got me thinking.

Just saw Fidelity has one that doesn't have a minimum to open an account. Link is below. I guess, I'll just save and try and open at Vanguard so all of us are in one place.

https://www.fidelity.com/retirement-ira ... f=99999999

Do you think I could open this and then transfer to Vanguard when it reaches 1,000?

Thanks-
Jim
Good idea to open one. We used Fidelity for our kids with their earned income and used the commission free iShares to get the three fund portfolio started for them early as there were no lower limits (outside of the share prices) to get them going.

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JimmyJim
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Re: ROTH IRA for children

Post by JimmyJim »

Thanks for your replies everyone!

Old computer guy---I'll try that and see if it works! I'll post to this thread if it does.

letsgobobby---Good for you for paying half. My children don't want to pay anything. Unfortunately, no one in my family has any interest in stocks, IRA's etc. I try and talk about it and try and teach them how important it is but it falls on deaf ears. Yesterday I told my family our AMZN stock went up $130 a share in one day! and got nothing.....Sounds like your father did it right!

Cycling duo--I may give Fidelity a shot if I can't get it through Vanguard. Commission free iShares sounds great, and your name just convinced me to go for a bike ride!
StealthRabbit
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Re: ROTH IRA for children

Post by StealthRabbit »

I set our kids up with ROTHs @ age 12. I matched 100% of their earned income till age 18. So they each had ~$16-20k by age 18. One went with individual stocks, the other vanguard mutuals. Both were equal at age 18. As homeschoolers (lots of free time) They attended my complementary training with several brokerages and fund accounts, including significant learnings from Think or Swim. 25 yrs later.... the ‘trader’ is a professional with CFA certs and a highly coveted job. (Just a fluke I am sure), but he learned a lot from mistakes. Today, is a rock solid analytical investor.



ROTH is a very flexible tool. Can withdraw contributions after 5 yrs (if needed)

Excellent savings vehicle for kids.
FAFSA, didn’t consider it, or touch it. Neither have they.

They got ZERO college money from us. (They had designed & built their own homes as home school projects ( with substantial labor by parents...) so they had a $100k net worth by age 18)

2 yrs FREE full time college instead of attending High School really helped them out. (available in WA and HI)

During college they invested the equivalent of college loan amounts and did very well. Consolidated loans at 2.7%, still investing the equivalent capital and enjoying great disciplined returns.

Consider availing your kids to much investing and financial exposures. Especially NON-WAGE opportunities.
We still partner with our kids in Real Estate investment properties and projects. They will inherit nothing, except becoming the successor designators of our family foundation. (Small, but self perpetuating, all done via a single earner hourly factory job). Very simple, very effective (in our case)

Best wishes for your kids / grandkids.
Stormbringer
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Re: ROTH IRA for children

Post by Stormbringer »

I started my daughter out with $1000 in a Roth a few years ago, and she adds $10 every two weeks. She is in college.
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Bonnan
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Re: ROTH IRA for children

Post by Bonnan »

Stealthrabbitt, How did the kids have earned income with a W2? Please clue me in.
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JimmyJim
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Re: ROTH IRA for children

Post by JimmyJim »

Nice Stormbringer-- hopefully my kids will want to add when they get to college.

Wow--more amazing parenting. Congrats stealth rabbit for doing it right! Didn't know that about FAFSA---interesting. Thanks for all that great info. stealth rabbit. I have much to learn.
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Re: ROTH IRA for children

Post by Spirit Rider »

Bonnan wrote: Sat Oct 28, 2017 10:15 am Stealthrabbitt, How did the kids have earned income with a W2? Please clue me in.
My guess, employees of your own business. You are generally exempt from most rules of federal and most state's child labor laws.

If you have an unincorporated business, you (employer) and them (employee) pay no FICA < 18 and you pay no FUTA < 21. They have no deductions from their pay and you don't have any payroll taxes.

You get the business deduction that passes through to your Form 1040 at your marginal tax rate since they get the full standard deduction probably pay no income taxes.
Last edited by Spirit Rider on Sat Oct 28, 2017 11:10 am, edited 1 time in total.
Stormbringer
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Re: ROTH IRA for children

Post by Stormbringer »

JimmyJim wrote: Sat Oct 28, 2017 10:24 am Nice Stormbringer-- hopefully my kids will want to add when they get to college.
I just asked her and she's up to $2,580 now and seems pretty proud of it.
Last edited by Stormbringer on Sat Oct 28, 2017 11:25 am, edited 1 time in total.
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wstrdg
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Re: ROTH IRA for children

Post by wstrdg »

Bonnan wrote:
How did the kids have earned income with a W2?
Our kids had earnings from babysitting, substitute dance school teaching, summer internships, etc. Some of this income was reported on a 1099 but most wasn't. They self-reported the income as Miscellaneous on their income tax returns -- it was below the taxable threshhold for either income tax or self-employment tax. It wasn't much each year, but it was enough to open a ROTH IRA and get them started. This was long before Nudge was written (by Cass Sunstein and Richard Thaler), but the idea is the same: it's easier to contribute to savings if the account is open.
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Re: ROTH IRA for children

Post by StealthRabbit »

Bonnan wrote: Sat Oct 28, 2017 10:15 am Stealthrabbitt, How did the kids have earned income with a W2? Please clue me in.
They filed income on my 1040, Up to $14k iirc...
1) we had rental props they worked on
2) farm income / 4-H
3) working for neighbors
4) their own businesses (very common for home schoolers) ez to do with eBay / farmers markets / on-line retailing.
5) working for neighbors

Their ROTHs were ‘Guardian’ till age 18

FAFSA exemption is a very big deal. Otherwise 100% of student’s savings is ‘attachable’. I never understood why FAFSA did not include student retirement accounts.... but I didn’t raise the question :moneybag
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Re: Roth IRA for children

Post by LadyGeek »

I fixed the spelling in the thread title: "ROTH" to "Roth". The Roth IRA was named after a senator. It's not an acronym.
Named after US Senator William Roth, Roth IRAs were established by the Taxpayer Relief Act of 1997.
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Re: ROTH IRA for children

Post by pshonore »

StealthRabbit wrote: Sat Oct 28, 2017 11:18 am
Bonnan wrote: Sat Oct 28, 2017 10:15 am Stealthrabbitt, How did the kids have earned income with a W2? Please clue me in.
They filed income on my 1040, Up to $14k iirc...
1) we had rental props they worked on
2) farm income / 4-H
3) working for neighbors
4) their own businesses (very common for home schoolers) ez to do with eBay / farmers markets / on-line retailing.
5) working for neighbors

Their ROTHs were ‘Guardian’ till age 18

FAFSA exemption is a very big deal. Otherwise 100% of student’s savings is ‘attachable’. I never understood why FAFSA did not include student retirement accounts.... but I didn’t raise the question :moneybag
Please tell us how they filed "income" on your 1040 and were able to open Roth accounts. Any kid contributing to a Roth should file their own tax return documenting the income, which effectively means the IRS cannot question that down the road.
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Re: Roth IRA for children

Post by LadyGeek »

The wiki has some background info: Kiddie tax
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Re: Roth IRA for children

Post by StealthRabbit »

LadyGeek wrote: Sat Oct 28, 2017 11:35 am The wiki has some background info: Kiddie tax
As per accounting practices.... and our accountant.... their income shows up itemized under our return, as they were under the threshhold required for filing (until age 15 or so). Once they met the threshhold for filing, they filed their own 1040’s.

I was not impressed to have them on my forms, and me paying a marginal rate for their earnings; but that is what was required at the time.

We file lots of forms (6) Llc’s + Farm + RE investments and 1031’s ... so I didn’t welcome the extra work, but felt it worthwhile for the kids to get full IRA contributions since age 12.
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Re: ROTH IRA for children

Post by Spirit Rider »

pshonore wrote: Sat Oct 28, 2017 11:30 am
StealthRabbit wrote: Sat Oct 28, 2017 11:18 am
Bonnan wrote: Sat Oct 28, 2017 10:15 am Stealthrabbitt, How did the kids have earned income with a W2? Please clue me in.
They filed income on my 1040, Up to $14k iirc...
1) we had rental props they worked on
2) farm income / 4-H
3) working for neighbors
4) their own businesses (very common for home schoolers) ez to do with eBay / farmers markets / on-line retailing.
5) working for neighbors

Their ROTHs were ‘Guardian’ till age 18

FAFSA exemption is a very big deal. Otherwise 100% of student’s savings is ‘attachable’. I never understood why FAFSA did not include student retirement accounts.... but I didn’t raise the question :moneybag
Please tell us how they filed "income" on your 1040 and were able to open Roth accounts. Any kid contributing to a Roth should file their own tax return documenting the income, which effectively means the IRS cannot question that down the road.
I agree mostly with what you are saying. You can only elect to file a minor child's investment income on your own tax return.

A minor child must file their own tax return if they have reportable earned income. This is tips not reported on a W-2, self-employment net earnings >= $400 or W-2 wages > the standard deduction (2017 = $6,350).

However, there is no need to file a tax return if they had no income taxes withheld and they didn't meet one of the above criteria. The W-2 will provide sufficient proof of compensation for the Roth IRA contribution.

In fact, when I helped one of my girls file her first tax return with no income tax withholding and < the standard deduction, the IRS sent a letter saying it was not necessary and please don't use government resources unnecessarily.
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JimmyJim
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Re: Roth IRA for children

Post by JimmyJim »

LadyGeek wrote: Sat Oct 28, 2017 11:28 am I fixed the spelling in the thread title: "ROTH" to "Roth". The Roth IRA was named after a senator. It's not an acronym.
Named after US Senator William Roth, Roth IRAs were established by the Taxpayer Relief Act of 1997.
Thanks for that clarification!
TravelforFun
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Re: Roth IRA for children

Post by TravelforFun »

My 14-year-old grandson has been taking care of my yard and doing chores around my house for the last two years. I pay him $50 a week, 52 weeks a year. I give him a 1099 form, pay his taxes on the 1099, and add $2,500 a year to his Roth account which is 100% stock. As he gets older, I'll get him to do more, pay him more, and add more to his Roth. I'll also teach him how to manage his assets.

The kid's financial future should be very bright.

TravelforFun.
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Re: Roth IRA for children

Post by itstoomuch »

We did UGMA for non W2 and non 1099 jobs. Fewer restrictions.
YMMV
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Re: Roth IRA for children

Post by itstoomuch »

@StealthRabbit,
So are you home or are at home or going to one of your home's?
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
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Re: Roth IRA for children

Post by StealthRabbit »

LadyGeek wrote: Sat Oct 28, 2017 11:35 am The wiki has some background info: Kiddie tax
Yes, use this kiddie tax info to your advantage, especially the notes on gifting appreciated stock (does not qualify for IRA), but is a great way to get kids engaged in investing. I used that avenue for graduation gifts for kids of friends who didn’t get such a strong start. (Usually kids from single parents, or those being raised by their (poor) grandparents.

As you know... I am always ‘between homes’ as all are rented, but all are also ‘gifted’ to charity... so I have no home. I do LUV SWA free WiFi, just passing over Grand Canyon at the moment. Beautiful.
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Re: Roth IRA for children

Post by Spirit Rider »

TravelforFun wrote: Sat Oct 28, 2017 12:52 pm My 14-year-old grandson has been taking care of my yard and doing chores around my house for the last two years. I pay him $50 a week, 52 weeks a year. I give him a 1099 form, pay his taxes on the 1099, and add $2,500 a year to his Roth account which is 100% stock. As he gets older, I'll get him to do more, pay him more, and add more to his Roth. I'll also teach him how to manage his assets.

The kid's financial future should be very bright.
You should not have been paying him on a 1099. The IRS rules are very clear on this, see Publication 926. There is no doubt that he was a household employee and with > $2000 in wages, you should have been deducting Social Security and Medicare taxes and submitting a W-2 to the IRS and him. Since his wages < $1,000/quarter, there would be no need to pay FUTA for him.
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Re: Roth IRA for children

Post by TravelforFun »

Spirit Rider wrote: Sat Oct 28, 2017 2:33 pm
TravelforFun wrote: Sat Oct 28, 2017 12:52 pm My 14-year-old grandson has been taking care of my yard and doing chores around my house for the last two years. I pay him $50 a week, 52 weeks a year. I give him a 1099 form, pay his taxes on the 1099, and add $2,500 a year to his Roth account which is 100% stock. As he gets older, I'll get him to do more, pay him more, and add more to his Roth. I'll also teach him how to manage his assets.

The kid's financial future should be very bright.
You should not have been paying him on a 1099. The IRS rules are very clear on this, see Publication 926. There is no doubt that he was a household employee and with > $2000 in wages, you should have been deducting Social Security and Medicare taxes and submitting a W-2 to the IRS and him. Since his wages < $1,000/quarter, there would be no need to pay FUTA for him.
Thanks Spirit Rider. I will research Pub 926. My grandson doesn't live with me, he comes when his schedule allows, and that's why I consider him a contractor. When I file his 1040, I pay his self employment tax too.
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Portfolio7
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Re: Roth IRA for children

Post by Portfolio7 »

Another Fidelity user here. My oldest has special needs, so that's a different discussion altogether. My youngest had his first job at age 15 and made almost $2,000. I told him if he put 50% into a Roth IRA, we'd match it. Free money. He got that pretty quick and went all in. So we went down to Fidelity and took a couple hours to set it up. The lady at the counter didn't quite understand why we didn't just do it online - but in-person with a youth is far superior to doing it online, it's more visceral. I think my son grew about ten feet inside as he signed paper after paper; he was feeling very grown up. Long after we've signed the papers and invested the money, It's clear that he takes great pride in it.

It's all in AOA, an aggressive (85/15 roughly) all in one stock and bond etf. I hope to use that as a starting point to talk about portfolio construction with him; but he's not quite ready for that yet. Next summer, probably.
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AllMostThere
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Re: Roth IRA for children

Post by AllMostThere »

This subject has been addressed on numerous occasions, and every time I am either lacking understanding of the process or there is vagueness in the responses (thinking the latter, :happy ). I have two kids aged 15 & 11 who I would like to kick start in life with Roth IRA contributions. Neither has a job that provides a W2, nor am I self employed, but both kids make money doing odd jobs and babysitting around the neighborhood. What would really be helpful if someone could point me in the direction of a step-by-step process, either another BH post or website, on how to accomplish this action without gaining unwanted IRS attention. A step-by-step process was very useful to me in understanding the Back Door and Mega Back Door Roth, so a Kiddie Roth IRA process would be appreciated. Thanks.
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Re: Roth IRA for children

Post by Spirit Rider »

TravelforFun wrote: Sat Oct 28, 2017 4:13 pm Thanks Spirit Rider. I will research Pub 926. My grandson doesn't live with me, he comes when his schedule allows, and that's why I consider him a contractor. When I file his 1040, I pay his self employment tax too.
Most household help doesn't live in the household. The household help requirements are little more strict than the normal employee vs. independent contractor issues. Yard work and household help are two of the duties presumed to be household employment, unless the evidence indicates self-employment. To be considered self-employed, he would have to at a minimum; provide his own tools, offer his services to the general public and in control of how the work is done.

With that said, the black helicopters are not out searching for people in your situation. You are making sure he is filing tax returns and paying his SE taxes. They are looking for people who are paying adults less than Fair Market Value (FMV) wages under the table. Disadvantaging people with no Social Security and Medicare earnings credits and no unemployment insurance.

I was just pointing out what is the most defensible way to pay him.
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FiveK
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Re: Roth IRA for children

Post by FiveK »

JimmyJim wrote: Sat Oct 28, 2017 8:55 am Has anyone opened a Roth for their children?
If you use the word "custodial" it opens some doors. E.g., see Where to start a child's Roth IRA with very low income?

As noted there, Fidelity, Schwab, and Vanguard will all provide this.
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Re: Roth IRA for children

Post by CyclingDuo »

AllMostThere wrote: Sat Oct 28, 2017 5:53 pm This subject has been addressed on numerous occasions, and every time I am either lacking understanding of the process or there is vagueness in the responses (thinking the latter, :happy ). I have two kids aged 15 & 11 who I would like to kick start in life with Roth IRA contributions. Neither has a job that provides a W2, nor am I self employed, but both kids make money doing odd jobs and babysitting around the neighborhood. What would really be helpful if someone could point me in the direction of a step-by-step process, either another BH post or website, on how to accomplish this action without gaining unwanted IRS attention. A step-by-step process was very useful to me in understanding the Back Door and Mega Back Door Roth, so a Kiddie Roth IRA process would be appreciated. Thanks.
Document the earnings from the odd jobs, babysitting, etc... around the neighborhood. The rules and guidelines are all over the internet, at brokerage houses, and at the IRS.

http://www.rothira.com/roth-iras-for-kids

https://www.kiplinger.com/article/savin ... h-ira.html

http://budgeting.thenest.com/can-parent ... 25445.html

https://www.fidelity.com/retirement-ira/roth-ira-kids

https://www.marketwatch.com/story/why-k ... 2015-03-11

https://www.fool.com/knowledge-center/r ... h-ira.aspx
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Small Law Survivor
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Re: ROTH IRA for children

Post by Small Law Survivor »

Couple of comments:

First, I opened Roth at Vanguard for my daughter when she was around 15 years old. She only had a few hundred dollars of income, but my Vanguard rep allowed her to open a target date fund with that money. I had the impression he was doing me a favor by allowing this. Might be worth a try.

Second, with respect to this observation -
pshonore wrote: Sat Oct 28, 2017 11:30 am Any kid contributing to a Roth should file their own tax return documenting the income, which effectively means the IRS cannot question that down the road.
My daughter did NOT file returns when she was in her mid-teens earning just a few hundred dollars a year. I asked an accountant whether she should, and he said no, don't bother. Also, I note that on the simple federal return forms (1040EZ) there is no place to report a contribution to a Roth IRA.

I have kept her earnings records (all the way down to checks for taking care of neighbors' pets), so she could prove the earnings at some point in the future.

If anyone thinks I've handled this incorrectly, I'd appreciate hearing about it.
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Spirit Rider
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Re: Roth IRA for children

Post by Spirit Rider »

The key mistake that most people make is considering; babysitting, cutting lawns, snow removal, painting, odd jobs, etc... as self-employment and have the minor pay SE taxes. In most cases this is unnecessary and counterproductive.

In almost all cases unless the minor has offered their their services as a business, provides their own tools and is in control or their work, they are household help.

If the pay from any one household is < $600/year, the household employer does not even have to file a W-2. In this case a detailed record of the pay should be kept. It would be ideal if the household employer provided some pay statement or you have a record of the payment (receipt, check, venmo payment, etc..,)

If the pay from any one household is < $2000/year, the household employer will have to file a W-2, but not pay any FICA or have to withhold income taxes. This is a once per year inexpensive (<= $5) online exercise.

If the pay from any one household is < $1000/quarter, the household employer will not have to pay FUTA.

If the total of all pay from all employers < standard deduction (2017 = $6,350, 2018 = $6,500) and there was no income tax withholding, the minor does not have to file a tax return. It is really unnecessary, the IRS does not want you to and in fact communicated that to my oldest girl when I had her file.

Bottom line. If your minor child earns money from incidental work from neighbors, friends and family, it is likely that no FICA or income tax needs to be withheld by them. This will make them happy and your child happy they don't have to pay SEE taxes.
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Re: Roth IRA for children

Post by DrGoogle2017 »

I opened Roth IRA when my daughter was 15, she earned just a little over a $1000, but it was enough to open with Vanguard Star Mutual fund. No income tax was filed because it was a low amount. I helped contribute to her Roth IRA as long as she was earning something in high school. Fast forward, almost 10 years later, she has tripled all the money she contributed. I’ve hold back in contributing any more since she graduated from college. I want my kid to take care of her retirement, she needs to learn to be an adult, I don’t want to keep gifting money even though I could. This year, she did contribute some to her Roth IRA. Any bonus she has at work will go into her SEP IRA.
For my second daughter, I didn’t contribute anything because she didn’t work in high school. All her money earned from internships and part time jobs were spent. But I did give her a graduation gift as a Roth contribution for last year. This year she is contributing 40% of her salary to $401k and also starts contributing to ESPP and Roth IRA on her own money. It’s a lot of money for savings, but she knows she has to do it. It takes money to make money, there’s no free lunch.
Last edited by DrGoogle2017 on Tue Oct 31, 2017 2:11 pm, edited 1 time in total.
TheAncientOne
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Re: Roth IRA for children

Post by TheAncientOne »

Our children had the usual high school jobs (restaurant, shoe store) and we funded their Roth IRAs entirely so that they could use the money they earned for spending. We continued this while they were at college. They knew we were doing it and understood that this would be funds for a period in their lives that they could not really envision. I appreciate the idea of having your kids match your contribution but we felt that we were teaching them the power of compound interest along with the idea of thinking long term.
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Re: Roth IRA for children

Post by Small Law Survivor »

TheAncientOne wrote: Tue Oct 31, 2017 11:10 am Our children had the usual high school jobs (restaurant, shoe store) and we funded their Roth IRAs entirely so that they could use the money they earned for spending. We continued this while they were at college. They knew we were doing it and understood that this would be funds for a period in their lives that they could not really envision. I appreciate the idea of having your kids match your contribution but we felt that we were teaching them the power of compound interest along with the idea of thinking long term.
My father did this for me in the 1970s when IRAs were first introduced, and we've done it for our daughter. This is a great way to introduce your child to investing. My daughter looked at her account statement from Vanguard recently and said, "wow, up $800! That's huge!" :sharebeer
69 yrs, semi-retired lawyer, 50/40/10 s/b/c, 70/30 dom/int'l. Plan: 4% WR until age 70, 3% after social security kicks in. Boglehead since day 1 (and M* Diehard before that) under various other names
aristotelian
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Re: ROTH IRA for children

Post by aristotelian »

StealthRabbit wrote: Sat Oct 28, 2017 9:50 am I set our kids up with ROTHs @ age 12. I matched 100% of their earned income till age 18. So they each had ~$16-20k by age 18. One went with individual stocks, the other vanguard mutuals. Both were equal at age 18. As homeschoolers (lots of free time) They attended my complementary training with several brokerages and fund accounts, including significant learnings from Think or Swim. 25 yrs later.... the ‘trader’ is a professional with CFA certs and a highly coveted job. (Just a fluke I am sure), but he learned a lot from mistakes. Today, is a rock solid analytical investor.



ROTH is a very flexible tool. Can withdraw contributions after 5 yrs (if needed)

Excellent savings vehicle for kids.
FAFSA, didn’t consider it, or touch it. Neither have they.

They got ZERO college money from us. (They had designed & built their own homes as home school projects ( with substantial labor by parents...) so they had a $100k net worth by age 18)

2 yrs FREE full time college instead of attending High School really helped them out. (available in WA and HI)

During college they invested the equivalent of college loan amounts and did very well. Consolidated loans at 2.7%, still investing the equivalent capital and enjoying great disciplined returns.

Consider availing your kids to much investing and financial exposures. Especially NON-WAGE opportunities.
We still partner with our kids in Real Estate investment properties and projects. They will inherit nothing, except becoming the successor designators of our family foundation. (Small, but self perpetuating, all done via a single earner hourly factory job). Very simple, very effective (in our case)

Best wishes for your kids / grandkids.
Aren't they only allowed to contribute earned income to a Roth IRA? How can you "match" their income? You mean that you contributed for them up to their earned income (not that you doubled their contribution)?
harvestbook
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Re: Roth IRA for children

Post by harvestbook »

I match my daughter's income in a Roth (invested in Vanguard Target Retirement 2060). She works part-time for my wife's housekeeping business. I plan to continue the match through her college years as long as she works part-time.

She also has a brokerage UTMA that's a back-up college fund and she even contributes half of one of her monthly job's income to it herself, so she already is gaining an understanding of investing.
I'm not smart enough to know, and I can't afford to guess.
letsgobobby
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Re: ROTH IRA for children

Post by letsgobobby »

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TravelforFun
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Re: ROTH IRA for children

Post by TravelforFun »

letsgobobby wrote: Wed Nov 01, 2017 1:19 pm
aristotelian wrote: Wed Nov 01, 2017 7:58 am
StealthRabbit wrote: Sat Oct 28, 2017 9:50 am I set our kids up with ROTHs @ age 12. I matched 100% of their earned income till age 18. So they each had ~$16-20k by age 18.
Aren't they only allowed to contribute earned income to a Roth IRA? How can you "match" their income? You mean that you contributed for them up to their earned income (not that you doubled their contribution)?
In my case my dad provided a 100% match. So I earned $1000 and contributed $500, and he contributed $500.
In may case, grandson makes $2,500 and I put $2,500 in his Roth account with my own money. I call this 'infinity % matching'
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