Anonymous
Post 11/13/2023 22:28     Subject: Re:Funding Roth IRA for minor children
Yeah, I mean, it's not permitted. I don't know as a practical matter how often enforcement actions are taken against people who are cheating like this, but kids earning money for doing household chores is not considered "earned income."
Anonymous
Post 11/13/2023 22:26     Subject: Funding Roth IRA for minor children
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Did your child file taxes? If he only earned $1000 for the year, the Roth IRA can only be funded $1000.


You can pad this with another $400 that would be income like baby sitting that they don't need to pay payroll taxes on.


No, you can’t. There is no “padding” or “would be income.”


Let me correct that for ya. "No, you shouldn't, but you can"
Anonymous
Post 11/13/2023 22:25     Subject: Funding Roth IRA for minor children
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Did your child file taxes? If he only earned $1000 for the year, the Roth IRA can only be funded $1000.


You can pad this with another $400 that would be income like baby sitting that they don't need to pay payroll taxes on.


No, you can’t. There is no “padding” or “would be income.”



This is not entirely true. DH and I opened Roth IRAs two years ago for our now 17 year old DD. We’ve contributed the max each year ($6K last year) and will have put in $6.5K this year. The only real requirement is that DD needs to have at least that much or more in earned income for the year. This is no problem, since she “earns” $7K in household chores and errands. As long as you file a tax return that claims this much in income, you’re good. Best to keep the alleged income low enough to avoid state and federal taxes, of course.

Also, nothing stops you from opening such a Roth IRA and basically using it for yourself as a tax shelter for speculative investing and then withdrawing contributions later for whatever. Profits stay behind and can be pulled to help pay for college, first home, etc….


I read that household chores and errands raise an eyebrow from the IRS, and is frowned upon for paid income from parents.
Anonymous
Post 11/13/2023 22:20     Subject: Funding Roth IRA for minor children
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Did your child file taxes? If he only earned $1000 for the year, the Roth IRA can only be funded $1000.


You can pad this with another $400 that would be income like baby sitting that they don't need to pay payroll taxes on.


No, you can’t. There is no “padding” or “would be income.”



This is not entirely true. DH and I opened Roth IRAs two years ago for our now 17 year old DD. We’ve contributed the max each year ($6K last year) and will have put in $6.5K this year. The only real requirement is that DD needs to have at least that much or more in earned income for the year. This is no problem, since she “earns” $7K in household chores and errands. As long as you file a tax return that claims this much in income, you’re good. Best to keep the alleged income low enough to avoid state and federal taxes, of course.

Also, nothing stops you from opening such a Roth IRA and basically using it for yourself as a tax shelter for speculative investing and then withdrawing contributions later for whatever. Profits stay behind and can be pulled to help pay for college, first home, etc….
Anonymous
Post 11/13/2023 22:09     Subject: Re:Funding Roth IRA for minor children
My young teens started their Roths with dog- and cat-sitting money (literally like $50 here and $50 there), and since then we have funded their Roths up to their annual earnings from part-time jobs. Just want to give them a head start on retirement saving.
Anonymous
Post 11/13/2023 22:04     Subject: Funding Roth IRA for minor children
keep good records
Anonymous
Post 11/13/2023 21:58     Subject: Funding Roth IRA for minor children
Anonymous wrote:
Anonymous wrote:Did your child file taxes? If he only earned $1000 for the year, the Roth IRA can only be funded $1000.


You can pad this with another $400 that would be income like baby sitting that they don't need to pay payroll taxes on.


No, you can’t. There is no “padding” or “would be income.”

Anonymous
Post 11/13/2023 21:43     Subject: Funding Roth IRA for minor children
Anonymous wrote:Did your child file taxes? If he only earned $1000 for the year, the Roth IRA can only be funded $1000.


You can pad this with another $400 that would be income like baby sitting that they don't need to pay payroll taxes on.
Anonymous
Post 11/13/2023 10:06     Subject: Funding Roth IRA for minor children
Did your child file taxes? If he only earned $1000 for the year, the Roth IRA can only be funded $1000.
Anonymous
Post 11/13/2023 09:51     Subject: Funding Roth IRA for minor children
How much?
Anonymous
Post 11/13/2023 09:19     Subject: Funding Roth IRA for minor children
Anonymous wrote:
Anonymous wrote:Go to your favorite brokerage and open a custodial Roth IRA account. Fund it up to the amount your kid earned. Invest in something long term like VTSAX or FXAIX.

You must put in the money the year he earned it.


Or before April15th of the next year.


yeah before tax date
Anonymous
Post 11/13/2023 09:16     Subject: Funding Roth IRA for minor children
Anonymous wrote:Go to your favorite brokerage and open a custodial Roth IRA account. Fund it up to the amount your kid earned. Invest in something long term like VTSAX or FXAIX.

You must put in the money the year he earned it.


Or before April15th of the next year.
Anonymous
Post 11/13/2023 09:08     Subject: Funding Roth IRA for minor children
You can't put in more than the amount he earned. We set up one for our daughter through Vanguard. I'm sure the others are the same. No downside.
Anonymous
Post 11/13/2023 08:38     Subject: Funding Roth IRA for minor children
Go to your favorite brokerage and open a custodial Roth IRA account. Fund it up to the amount your kid earned. Invest in something long term like VTSAX or FXAIX.

You must put in the money the year he earned it.
Anonymous
Post 11/13/2023 07:48     Subject: Funding Roth IRA for minor children
I see on this forum that people say they fund their kids’ Roth IRA. I would like to do this as well. DS is 15. He made some money as a CIT last summer. He will work more this summer. How do I get started? I need a quick tutorial on how to open a IRA Roth account for minor kids and understand pros and cons. Thank you.