As a parent, you want to ensure that your children have a bright future. You work hard to provide for your family and want your children to have every opportunity to succeed. One way to help secure their financial future is to establish a Roth IRA for them as soon as they are earning income. It may sound like something that’s reserved for retirement-age adults, but it’s a great investment that can set your child up for financial success. In this blog post, we’ll discuss Roth IRAs for children, the benefits of custodial Roth IRAs, and how BFG Tax Help can assist you in establishing one.
A Roth IRA is a type of retirement account that allows you to contribute after-tax dollars. The earnings on investments within the account grow tax-free, and withdrawals after age 59 1/2 are also tax-free. A Roth IRA for your child takes advantage of the fact that younger people have more time to grow their investments, making it a smart financial decision.
The custodial Roth IRA is a special type of Roth IRA that allows minors earning income to contribute to the account with the help of an adult custodian. The adult who opens the account manages the investments until the child reaches the age of majority in their state. At that point, the account is transferred to the child’s control. The account is an excellent way to provide children with a head start on building a nest egg and learning how to manage their money early on.
Aside from the tax-free growth and withdrawals, starting a Roth IRA for your child also teaches them about saving and how money grows over time with the power of compound interest. It’s an excellent opportunity to teach children about “The Rule of 72”
At BFG Tax Help, our team of experts can assist you in establishing a custodial Roth IRA for your child, answering any questions you may have along the way. As a parent, you want to provide the best opportunities for your children, and investing in their future with a Roth IRA can set them up for financial success.
In addition to investing in their future, contributing to a Roth IRA also has tax benefits for parents. Contributions are made with after-tax dollars, meaning that taxes have already been paid on the funds used to make contributions. This is advantageous because it means that when your child withdraws money from the account, there won’t be any taxes to pay.
As parents, we want to provide every opportunity for our children earning income to succeed. Investing in their financial future with a Roth IRA is an excellent way to help them build a nest egg and set them up for success. The custodial Roth IRA is a smart choice for minors, and it also provides tax benefits for parents. At BFG Tax Help, we can guide you through the process of opening and managing a Roth IRA for your child, answering any questions you may have along the way. Let us help you secure your child’s financial future today.