Our Favorite Roth IRA Hack

Howdy friends & Happy Hump Day!

March is on the way, spring is in the air, and the birds are singing again 😍 

As a Minnesotan, I’ve gotta say that this winter has been weird. No snowstorms, hardly any ice, and in the 50’s in February?! It’s unheard of! 🤠

I’m almost a little afraid of what April has in store for us Northerners. 😬

Currently, all the women I know are trying to play whack-a-mole with their flowers, which are growing like weeds and will surely die of frostbite when we get that inevitable April 29th snowstorm. 🥶

Much like these flowers, my little niece is growing like crazy, too!

With every new milestone she hits, I’m reminded that in the blink of an eye she’ll be buying a car, going to college, and thinking garage rock bands are the new “it” thing. 😳

As a new (and proud) auntie, I’ve been wondering what I can do to set this little tyke up for success.

With a college savings plan already in place, I took to the internet and found an article by Fidelity on Custodial Roth IRA’s, which I’ve decided to highlight below for you!

How to Help Your Kids Get Ahead of the Curve:

1. Education. 🎓
A custodial Roth IRA (Roth IRA for minors) is a retirement savings account opened by an adult that allows for tax free growth in the child’s name.

Whether it’s a loving grandparent, a family friend, or a parent that opens the account, they will maintain control of the finances until the child turns 18 or 21. ⚖️

Research: Every state varies on what age the child can have control transferred. Keep this in mind when opening a custodial account. 💡

2. Communication. 🗣️ 
Does your kid have a summer job? Teach them about the benefits of saving! A custodial Roth IRA allows for contributions up to $7,000 in 2024.

Pro Tip: Sitting down with your loved one might not be easy - but asking them to donate a portion of their earnings to their retirement fund teaches them valuable life lessons AND benefits them in the future. Financial freedom, here they come. 🥳

3. Action. 🏃 
Find a trusted brokerage firm to open the account (i.e. Fidelity, Vanguard, etc.). Even if your child isn’t old enough to have a summer hustle, you (and other relatives or friends) can make contributions to the account.

The account owner has total control over withdrawals, contributions, and distributions - and the money is guaranteed to always go to the child. When it comes to retirement, the name of the game is starting early!

4. Plan. 🤔 
Saving for your own retirement is hard enough, and now we’re adding on planning for your child’s?!

Don’t panic.
Monarch Money is a great financial tool to keep your finances on track - from debt to retirement savings to your electric bill, you can see where your accounts stand at all times. As an added bonus, all Mint users get 50% off right now with code MINT50 ** 😉

Warmly,
Kim

⭐️⭐️ P.S. Want to share all this goodness with your friends AND earn cool Frugal Friends merch?

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