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

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 It's hard enough to live the American dream without being out on the web on Google trying to find answers to complex Questions and just click in a mouse open you got it, right my team, and I want to be a huge resource treatment the law firm accounting firm my Education resources on my site. Please continue to follow these strategies I know the safety thousands now click here if you want to be a part of my newsletter It's awesome weekly updates and deadlines and strategies and tips also subscribe to my youtube channel You'll love it and make sure to click the bell icon So you get a little ping whenever there's a new video and finally check out my site Marjory Kohler comm with all sorts of videos Probably 70 plus videos 30 plus hours of content that'll save you thousands

Channel: Mark J Kohler

Views: 41,520

Keywords: tax, legal, entrepreneur, asset protection, wealth building, cpa, attorney, lawfirm, ROTH, roth ira, IRA, Payroll, Children in business, Putting your child on payroll, Mark, Mark J Kohler, Mark Kohler, Markjkohler.com, American Dream, Business, Free Tax Tips, Free Legal, free legal advice, KKOS Lawyers, Newsletter, dumbed down, wealth management, Wealth building, Savings, children roth, million dollar roth, child roth, Making a ROTH for your kids, Million dollar ROTH

Id: k-cPTbac3YA

Length: 7min 29sec (449 seconds)

Published: Tue Oct 02 2018