Roth IRA- no age limit to contribute

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  • #89473 Reply

      If I had a mortgage company or a rental home business, or just about any business, and my own child, I’d put my child in the advertising of my business. 

      The child then becomes an employee. I’d put money into the Roth, as that would be the child’s income from utilizing the child as a mode. 

      Start a child’s Roth IRA from Birth, and contribute to the child’s Roth IRA, and by the time their 18 years of age, the investment and compound interest is unimaginable.

      #89474 Reply

        Technically true 2 factors to consider:

        1) the reasonableness of the business expense, is this a reasonable and ordinary business expense? Under scrutiny this probably would not hold up audit.

        2) child labor laws.

        #89475 Reply

          As long as you can put your own mask on first. I think it’s a great idea otherwise!

          But we must also remember that there is no rule that prevents them from accessing their own money at 18. If we don’t teach them how to invest and not to touch it then that is a decent size windfall of “free money” to come into at a young age without actually working for it and quite a few could care less about the taxes they would pay. They just want to travel to Europe with friends.

          Explore these too: I maxed my Roth IRA earlier this year.. So–

          #89476 Reply

            My 5 and 6yos are on my payroll. They do legitimately do work for my business. All of the income they earn goes to their roths.

            #89477 Reply

              A+ for creative thinking. But I would never try this unless you enjoy spending time with IRS auditors.

              #89478 Reply

                You are on the right track.

                Read or listen to Tax Free Wealth in YouTube and make sure you have receipts/invoices and explanations in case you get audited.

                The other benefit is the income will be taxed at your child’s tax rate (most likely 0%), instead of yours.

                As your child gets older, you can have them do office work like filing, cleaning, and data entry. They’ll get more income, more Roth contributions, you’ll get more tax breaks, and your kid will learn your family business, which they may take over in the future.

                Also, check out: For a Roth IRA, would you choose Vanguard or Empower (used to be Personal Capital)?

                #89479 Reply

                  Yes….. BUT….. it has to be able to withstand an irs audit. So it has to be a legit and verifiable business expense. You can’t use your kids picture on a flyer and paying them $6000. You can’t take your baby to work with you and call it training and pay them (yes. I’ve seen this one before).

                  #89480 Reply

                    Yup! Just $100/mn into a ROTH for ages 1-18 would be worth $2.6M at age 59 with NOTHING else added past age 18! $200/mn would be $5.2M. All tax free!

                    Likewise, if every parent just set up an investment account at birth with $20k in it, their child would have $5.6M at age 59.5. Nothing else has to be added from day one onward.

                    This is actually my solution to our social security issue as well. $20k into every new born’s account. They pay the $20k back at working age ($200/mn for 8 years). Every 59 year old would have approx $5.6M for retirement. ALL compound interest.

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