Each year, the news on Social Security gets worse. It’s not unusual for parents to worry about their kids’ retirement (let alone their own retirement). Parents, however, have retirement savings opportunities for their children.
“A great scenario is the case where a parent operates a business that is reported on Schedule C of their tax return and their minor child is an employee,” says Robert Steinberg, founder & CEO of Blue Chip Partners in Farmington Hills, Michigan. “The child can be paid wages and the parent is not required to withhold Social Security or Medicare. Years ago, we had a client who owned their own business and they hired their children to clean the building and do other odd jobs such as data entry.
“You can’t use a gift as earned income for this purpose,” says Rosen. “The money has to come from work. So if you’re thinking about simply writing your kid a check and then using it for a ROTH IRA, you’re out of luck.”Minor children who have started their own businesses will often find it useful to consider setting up SEP-IRAs or so-called “Solo” 401ks. This is most likely an option for enterprising teenagers. In general, however, the standard IRA represents the best way to create a Child IRA.
Even if your children have to pay taxes on their income, the benefit of deferring taxes today may not be enough to offset the advantages of withdrawing tax-free during retirement.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Nick Gilbert, son of Cavaliers owner Dan Gilbert, dies at 26Nick Gilbert, known by some NBA fans as the Cleveland Cavaliers' lucky draft representative, has died at 26, the Ira Kaufman Chapel announced. A funeral announcement posted by the Southfield, Michigan Chapel said Gilbert died Saturday, May 6, 2023 'peacefully at home surrounded by family.'
Read more »
Butler scores 28, Heat top Knicks for 2-1 series leadThe Heat topped the Knicks on Saturday to take a 2-1 lead in their East semifinal series.
Read more »
Durbin: 'Everything is on the table' in response to 'tangled web' of Clarence Thomas revelationsRevelations about Supreme Court Justice Clarence Thomas's financial disclosures get 'worse and worse by the day,' Sen. Dick Durbin said Sunday, and...
Read more »
Why the used car market could get worse for buyers. What will reverse the pattern?There's a shortfall of some 8.1 million cars that are not reaching the used market today, and used car inventories are near the lowest levels in over a decade.
Read more »
Tiger Woods accused of sexual harassment by ex-girlfriend in latest court filingA legal battle between Tiger Woods and his ex-girlfriend has made a turn for the worse after she alleged he sexually harassed her during their relationship.
Read more »
14 charts that show how the economy is performing in AlabamaIs our economy doing better or worse? See recent changes in local employment, regional inflation and more in these regularly updated charts and maps.
Read more »