Want to give your child a financial head start? A Roth IRA is a powerful way to help them build long-term, tax-free wealth—starting as early as their first job! In this video, Paul Sydlansky, CFP® breaks down how earned income (from babysitting, mowing lawns, or even working for the family business) can be invested in a Roth IRA. Plus, he covers a new rule that allows up to $35,000 in leftover 529 funds to roll into a Roth IRA.

Topics Discussed:

• Roth IRA eligibility for kids
• Tax-free growth and withdrawals
• Using earned income for contributions
• 529 rollover into a Roth IRA

Transcript:

Hi everybody. I’m Paul Sydlansky and welcome to Unlocking Hidden Value. Today, we’re going to talk about how you, as a parent, can help your child get a headstart on their financial future success by investing in a Roth IRA. 

Many parents don’t realize that your child, no matter what their age, can invest in a Roth IRA as long as they earned income. That can be any monies earned from things like babysitting, cutting grass, working at the family business. As long as that child has earned income, that amount up to $7,000 could be invested in a Roth IRA, which is one of the most powerful investment accounts because it allows your funds to grow tax free and they’re distributed tax-free over their lifetime. 

In addition, some recent changes in legislation have made this account even more attractive. The reason being is now, if a child has monies left over in their 529 account that they didn’t use for college, those monies can also be invested into a child’s Roth IRA up to a lifetime limit of $35,000. 

So what are you waiting for? Setting up a Roth IRA is a great way to set up your child’s financial future and let them get a headstart on building their wealth for tomorrow.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER® and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network. They can be reached by phone at the Corning, NY office at (607) 438-2914, Ithaca, NY office at (607) 463-8400, or Portland, OR office at (607) 292-2172 or at the firm’s website at https://lakeroadadvisors.com/