Can I set my Children Up with a Retirement Account? Tax Free Income! - YouTube

Hey Mark Kohler here want to talk about setting up a Roth for your children. Is that even possible?

Can you do a Roth for your children and save for the future and get a pretty cool tax strategy out of it? Absolutely

Let's run through the rules

Okay, I got my whiteboard here because this makes much more sense visually if we throw it on a whiteboard

Rule number one kids cannot have a Roth unless they have earned income

They have to have earned income. You can't give them money to open a Roth you can't

Have them invest in stock bonds or mutual funds and get passive income and open a Roth they have to have earned income

And and but that's okay

We can do that now any child under age five or six unless they're a superstar for some modeling scenario

Or an acting they're not going to have earned income

But I am a firm believer that kids under age 18 can start working in a business and if you're an entrepreneur

Even with rental property, let's get the kids involved in basic

Rental property maintenance or even bookkeeping shredding paper cleaning the home office. Let's get them involved. That's what's going to generate their own income

So watch my other youtube video on hiring your kids under age 18 for those of you with kids over age 18

I got a video for that too. So watch that but here's how the Roth works

This is I'm gonna try to keep this video short and to the point

is that ultimately you're gonna have a small business you got it and

so whether it's a sole proprietorship or an S Corp

You're gonna have this small business and it could even be an LLC taxed as a sole proprietor

So I'm just gonna kind of leave this but you know watch my other videos on all your options here

You could also have rental property here. You could have a rental property up here in a rental LLC

Maybe VRBO is Airbnb zoar long-term rentals, whatever

Whether you have an active

Operational business or a rental property you've now got the machine that can pay your kids

To be in the business now if you have an S Corp, I set up a little property

I'm sorry a family management company as sole proprietor here watch my other video on that but the point is we're gonna pay the kids

Right here

Now once your kids have earned income they can fund a Roth

So if I have a six-year-old and I'm gonna pay him a thousand dollars a year for cleaning the office 1200 a year

Maybe a hundred dollars a month. I could I could swallow that that could be realistic

So if I paid the kids $1,200 they can open a Roth and put $1,200 in up to their earned income. The max is

5500 this year so I could pay the kids

$5,500 maybe a teenager and they could put that 5500 right into a Roth

now when that happens if you're gonna fund a Roth I'd like to issue the kids at w-2

Now those that have worked with my office many times

we just call this outside labor and we never

issued the kids at w2 but if you're gonna go fund to Roth a lot of time a brokerage company is gonna be like, oh

This kids ten years old. How do they fund a Roth and you have to provide a w-2 just because they're freaking out but

That's it's not required because there's no withholding from the w-2

There's no penalty because there is the penalty is based on the withholding is there is none

So if you're paying your kids under the standard deduction you're fine. So anyway, the w2 is more of a kind of a

Funky thing to just help grease the wheels when you go through

To set up the account at the at the broker-dealer if you will so you get the kids paid and I'll pay the kids

Let's say we pay a child four thousand dollars out of one of these entities now, you can open the Roth now

We're still not done yet. This is where it gets good

Of course, we think direct self directing is critical and we love directed IRA

links down below directed IRA is a great place to open up a Roth for your kids and

You can come over here open up the Roth

Pay them drop the money into the Roth. They're not gonna pay any taxes because their standard deduction will zero out the 1040

Again, watch my other video on paying kids the beauty of this is once the Roth is opened at your broker-dealer directed IRA

Then the Roth can invest and this is where it gets fun

you could open another LLC of

Which you're a partner or your Roth or IRA as a partner?

and now you've got a an LLC that's going to go out and buy rentals by Super Bowl tickets by

Selena Gomez tickets and flip them by racehorses

Bitcoin

Cryptocurrency of any sort of gold silver is that cool you can take the Roth and create an LLC

Owned by your child's Roth and invest it and then any of those profits go back into the Roth tax-free now

Here's the last little twist. Why would we do this?

because not only can we start building a retirement account for our kids in a gross tax free and you can

Self-direct it in an LLC watch my other YouTube videos on self-directing and an LLC. Oh you'll love it

but what's cool here too is any

Contributions the kids put in they can pull out tax-free

for college

so

Contributions come out tax-free. No penalty any age pull them out for college. No problem the growth

Whatever this project of yours is created those have to stay in the Roth and they build a retirement for your child

so you're kind of knocking out a college savings plan and

at the same time

Building a retirement plan and you're getting a tax write-off to pay your kids in your business a tax write-off

to fund college tax-free

And then to build retirement tax-free, is that crazy?

I just got chills because there could be even more we could open up a Coverdale College IRA

You're for self-directed 401 K can get into the mix and now we're building multiple

Retirement accounts into one LLC and investing and what you know best now, I know these concepts are part of multiple

Trainings of minds my books my videos my classes, please look into it. We've got S Corp strategies

We've got paying your kids strategies. We've got college savings strategies

Retirement accounts strategies and self-directing strategies all here in one video. Oh

I love this stuff. So anyway, we're for real real law firm real accounting firm

And I love helping people live the American dream. Check this out keep studying

Subscribe all that good stuff. There's a little bit more to this video on how you can get involved. Thanks so much

Thanks so much for watching that video and I want to be your source for tax and legal strategies

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