Saving for kids college .... instead of 529 you can start Roth IRA in their name

[pandemkodi]

Mympi— How the heck they giving back tax free ? 
returns are same as index funds ,only thing is tax free . But something it not right . 
 

@vampire @Spartan Any inputs ?

does ceo seems like nikola ceo ?

[Spartan]

14 minutes ago, pandemkodi said:

Mympi— How the heck they giving back tax free ? 
returns are same as index funds ,only thing is tax free . But something it not right . 
 

@vampire @Spartan Any inputs ?

does ceo seems like nikola ceo ?

India lo kuda unnai same schemes...

its same replicated here.  @pandemkodi

[pandemkodi]

6 minutes ago, Spartan said:

India lo kuda unnai same schemes...

its same replicated here.  @pandemkodi

Does this means Roth IRA is no longer useful ? This seems too good to be true . 

[Spartan]

12 minutes ago, pandemkodi said:

Does this means Roth IRA is no longer useful ? This seems too good to be true . 

it is true, but i am still leaning towards ROTH IRA.  @pandemkodi

[Steelers]

1 hour ago, Spartan said:

it is true, but i am still leaning towards ROTH IRA.  @pandemkodi

Roth IRA on kids name aa?? if the kid started their school just now, how do you justify that kid of 5/6 yrs is earning? I am asking this because, fidelity lo kids earn chesina amount meedha ne Roth IRA open cheyyochu ani undhi.

https://www.fidelity.com/retirement-ira/roth-ira-kids

[Spartan]

17 minutes ago, Steelers said:

Roth IRA on kids name aa?? if the kid started their school just now, how do you justify that kid of 5/6 yrs is earning? I am asking this because, fidelity lo kids earn chesina amount meedha ne Roth IRA open cheyyochu ani undhi.

https://www.fidelity.com/retirement-ira/roth-ira-kids

check the links in first page.

https://www.irahelp.com/forum-post/33880-roth-kids

[k2s]

3 hours ago, pandemkodi said:

Mympi— How the heck they giving back tax free ? 
returns are same as index funds ,only thing is tax free . But something it not right . 
 

@vampire @Spartan Any inputs ?

does ceo seems like nikola ceo ?

yes - the trick in MPI is not withdrawal, you take loan out of your premium and for loans you pay no taxes

[pandemkodi]

44 minutes ago, k2s said:

yes - the trick in MPI is not withdrawal, you take loan out of your premium and for loans you pay no taxes

Thanks , You mean the interest  is tax deductible? 
or  the whole repayment ? 

[dkchinnari]

1 hour ago, k2s said:

yes - the trick in MPI is not withdrawal, you take loan out of your premium and for loans you pay no taxes

what if we dont use for education....

[k2s]

31 minutes ago, dkchinnari said:

what if we dont use for education....

You can use it for anything ... intlo pizza party personal expenses ani kuda withdraw chesuko.. just the gotcha is, it has to be taken as loan.. and max loan amount is dependent on how much capital is there in account. 

[summer27]

Bookmark 

[mettastar]

On 1/7/2022 at 4:56 PM, pandemkodi said:

Mympi— How the heck they giving back tax free ? 
returns are same as index funds ,only thing is tax free . But something it not right . 
 

@vampire @Spartan Any inputs ?

does ceo seems like nikola ceo ?

https://www.investopedia.com/articles/insurance/09/indexed-universal-life-insurance.asp

[quickgun_murugun]

On 1/6/2022 at 12:39 PM, Spartan said:

paying one time tax is better than paying loan for 30 years with 10+% interest rate.

Mana Dems ochi education loans maaf antey aa kick alag untadi 

[quickgun_murugun]

On 1/5/2022 at 11:20 PM, Spartan said:

recent ga came across article. brief overview is.

1 - for you child , start paying some salary for their chores not exceeding $2100 per annum. They can contribute all that amount to their Roth IRA and no need to worry about FICA and medicare taxes for them.

2- for kids, you can match additional amount equal to how much they earned, parent and grand parent as gift matching.  so total 6K varaku.

3- this ROTH IRA they can withdraw for their college expenses without penalty.

4- for federal FSA aids, there is workaround to withdraw that amount in 3rd and 4th year for their college.

by this u can bypass the strict rule of 529 should be used only for college expense anedi.

if they dont use it for their college, the roth ira, they can use it for anything in their life...

and you all know ROTH IRA growth beats 529 growth anytime .

Supporting links and reading.:

https://www.fool.com/investing/2020/11/14/surprise-you-can-use-a-roth-ira-to-pay-for-college/

https://www.marottaonmoney.com/do-children-need-to-file-a-tax-return-to-fund-their-roth-ira-2020/

https://www.investopedia.com/529-plan-vs-roth-ira-for-college-4771260

 

@k2s @psycopk @Anta Assamey

Payments to family members for household chores are not taxable income, so they can’t be used to support contributions to IRAs. It’s difficult to prove this income isn’t taxable. The Internal Revenue Code says all income is taxable unless an exception is made, and there’s no exception for amounts paid by parents to family members for household chores. Yet this is one of those things we all know instinctively. No one ever reports this kind of income on a tax return, and no one thinks they’re cheating when they fail to do so. The IRS has never suggested that this income should be reported. Just imagine the uproar if the IRS tried to collect tax on the money parents pay their children to babysit younger siblings or mow the lawn. 

[k2s]

On 1/9/2022 at 7:58 AM, quickgun_murugun said:

Payments to family members for household chores are not taxable income, so they can’t be used to support contributions to IRAs. It’s difficult to prove this income isn’t taxable. The Internal Revenue Code says all income is taxable unless an exception is made, and there’s no exception for amounts paid by parents to family members for household chores. Yet this is one of those things we all know instinctively. No one ever reports this kind of income on a tax return, and no one thinks they’re cheating when they fail to do so. The IRS has never suggested that this income should be reported. Just imagine the uproar if the IRS tried to collect tax on the money parents pay their children to babysit younger siblings or mow the lawn. 

https://www.nolo.com/legal-encyclopedia/why-its-tax-smart-hire-your-children.html

@Spartan - I opened ROTH IRA for kid, and called and verified with fidelity too. Now the biggest challenge is - how to show that child has earned income and you need to file W2 for them 

The IRS won't believe that an extremely young child is a legitimate employee. How young is too young? The IRS has accepted that a seven-year-old child may be an employee but probably won't believe that children younger than seven are performing any useful work for your business.

You should keep track of the work and hours your children perform. There are many apps available for this, or you can create a timesheet yourself with a spreadsheet or on paper. It should list the date, the services performed, and the time spent performing the services. Although not legally required, it's also a good idea to have your child sign a written employment agreement specifying their job duties and hours. These duties should be related only to your business.

To prove how much you paid (and that you actually paid it), you should pay your child by check or direct deposit, not cash. Do this once or twice a month as you would for any other employee. The funds should be deposited in a bank account in your child's or spouse's name. Your child's bank account may be a ROTH IRA, Section 529 college savings plan, or custodial account that you control until your child turns 21.

 

Now that Question is if kid is 7+ yrs old who can help you, but do you need to have a business with EIN # and you need to file W2 for that business and draw check to kid's name showing that its the earned income.. 

 

Finally, you must comply with most of the same legal requirements when you hire a child as you do when you hire a stranger. This means you must fill out IRS Form W-4 and complete U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You must also record your employee's Social Security number. If your child doesn't have a number, you must apply for one. In addition, you, the employer, must have an Employer Identification Number (EIN). If you don't have one, you may obtain it online at the IRS website (www.IRS.gov) or by filing IRS Form SS-4. You must also complete and file IRS Form W-2 each year showing how much you paid your child. For details, refer to the Hiring Employees FAQ at the Nolo website.