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Recommendations for opening Roth IRA accounts for kids

Home Estate Planning Recommendations for opening Roth IRA accounts for kids

  • Avatar tintin 
    Participant
    Status: Spouse
    Posts: 21
    Joined: 01/07/2019

    We are planning to open custodial Roth IRA accounts for our 2 kids and as we have started paying them through my business for 2018 for their help.

    Any recommendations on where to open custodial Roth IRA accounts – Vanguard, Fidelity, Chales Schwab etc? Since both kids are under 10, any recommendations on investment strategy – aggressive all stock vs 3/4-fund portfolio which includes bonds?

    Anything else to be aware of when hiring kids for your own business? I have reviewed WCI Podcast #51 which talks about Roth IRA accounts for kids already.

    From what I have learnt so far, Roth IRAs for kids look like a good estate planning tool assuming that kids do not liquidate the accounts when they turn 18 and spend money on a fancy car or something similar!

    #183183 Reply
    Avatar StrabismusBusiness 
    Participant
    Status: Physician
    Posts: 8
    Joined: 12/01/2017

    I set up custodial Roth IRA accounts for our 2 teenage children through Vanguard. In the Roth, we make contributions into Vanguard’s 2060 Target Date Fund. I know not everyone is a fan of target date funds. I thought the target date fund would provide diversification and rebalancing over time without them having to do anything.

    #183186 Reply
    Liked by Tim
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3594
    Joined: 01/08/2016

    I had one at Vanguard.

    All stock.

    #183189 Reply
    Liked by Tim
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 1834
    Joined: 03/01/2018

    Just make sure you’re paying them a fair market wage for real work. Keep records.

    Curious. What are you paying the kids to do? And how much?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #183243 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2107
    Joined: 01/03/2017

    I’d also be curious what you are paying your kids to do and how much. It seems like the last several threads on this haven’t gone so well as far as the plan behind “hiring” the children.

     

    I’d just throw it all in VTSAX and call it a day.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #183247 Reply

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