{"id":10306,"date":"2022-07-06T12:22:04","date_gmt":"2022-07-06T16:22:04","guid":{"rendered":"http:\/\/10.130.206.81\/?p=10306"},"modified":"2022-07-08T11:21:53","modified_gmt":"2022-07-08T15:21:53","slug":"the-potential-benefits-of-roth-iras-for-children","status":"publish","type":"post","link":"http:\/\/10.130.206.81\/2022\/07\/06\/the-potential-benefits-of-roth-iras-for-children\/","title":{"rendered":"The Potential Benefits of Roth IRAs for Children"},"content":{"rendered":"

Most teenagers probably aren’t thinking about saving for retirement, buying a home, or even paying for college when they start their first jobs. Yet a first job can present an ideal opportunity to explain how a Roth IRA can become a valuable savings tool in the pursuit of future goals.<\/p>\n

Rules of the Roth<\/h3>\n

Minors can contribute to a Roth IRA as long as they have earned income and a parent (or other adult) opens a custodial account in the child’s name. Contributions to a Roth IRA are made on an after-tax basis, which means they can be withdrawn at any time, for any reason, free of taxes and penalties. Earnings grow tax-free, although nonqualified withdrawals of earnings are generally taxed as ordinary income and may incur a 10% early-withdrawal penalty.<\/p>\n

A withdrawal is considered qualified if the account is held for at least five years and the distribution is made after age 59\u00bd, as a result of the account owner’s disability or death, or to purchase a first home (up to a $10,000 lifetime limit). Penalty-free early withdrawals can also be used to pay for qualified higher-education expenses; however, regular income taxes will apply.<\/p>\n

In 2022, the Roth IRA contribution limit for those under age 50 is the lesser of $6,000 or 100% of earned income. In other words, if a teenager earns $1,500 this year, his or her annual contribution limit would be<\/p>\n

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 <\/p>\n

 <\/p>\n

$1,500. Other individuals may also contribute directly to a teen’s Roth IRA, but the total value of all contributions may not exceed the child’s annual earnings or $6,000 (in 2022), whichever is lower. (Note that contributions from others will count against the annual gift tax exclusion amount.)<\/p>\n

Lessons for Life<\/h3>\n

When you open a Roth IRA for a minor, you’re giving more than just an investment account; you’re offering an opportunity to learn about important concepts that could provide a lifetime of financial benefits.<\/p>\n

For example, you can help explain the different types of investments, the power of compounding, and the benefits of tax-deferred investing. If you don’t feel comfortable explaining such topics, ask your financial professional for suggestions.<\/p>\n

The young people in your life will thank you \u2014 sooner or later.<\/p>\n

For questions about laws governing custodial Roth <\/em>IRAs, consult your tax or legal professional. There is <\/em>no assurance that working with a financial professional <\/em>will improve investment results.<\/em><\/p>\n

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2022<\/h6>\n
Non-deposit investment products and services are offered through CUSO Financial Services, LP (\u201cCFS\u201d) a registered broker-dealer(Member FINRA\/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA\/NCUSIF or other wise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS for investment services. Atria Wealth Solutions, Inc. (\u201cAtria\u201d) is a modern wealth management solutions holding company. Atria is not a registered broker-dealer and\/or Registered Investment Advisor and does not provide investment advice. Investment advice is only provided through Atria\u2019s subsidiaries. CUSO Financial Services, LP is a subsidiary of Atria.<\/h6>\n","protected":false},"excerpt":{"rendered":"

Most teenagers probably aren’t thinking about saving for retirement, buying a home, or even paying for college when they start their first jobs. Yet a first job can present an ideal opportunity to explain how a Roth IRA can become a valuable savings tool in the pursuit of future goals. Rules of the Roth Minors […]<\/p>\n","protected":false},"author":1,"featured_media":10317,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[],"yoast_head":"\nThe Potential Benefits of Roth IRAs for Children - Widget Financial<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/10.130.206.81\/2022\/07\/06\/the-potential-benefits-of-roth-iras-for-children\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Potential Benefits of Roth IRAs for Children - Widget Financial\" \/>\n<meta property=\"og:description\" content=\"Most teenagers probably aren’t thinking about saving for retirement, buying a home, or even paying for college when they start their first jobs. 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