If your children are employed this summer, consider boosting their future by setting up a Roth IRA.

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• A Roth IRA is a retirement account funded with after-tax dollars, meaning contributions do not qualify for tax deductions. However, this can be highly advantageous for young individuals because all earnings and income within the Roth IRA can be withdrawn tax-free in retirement, provided certain conditions are met. Given their long-time horizon before retirement, your kids account would have the opportunity to grow substantially.  

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• A few things to note:

• First, the child must have earned income to contribute.
• The max contribution for a Roth IRA in 2024 is $7,000 or your annual income if less than $7K. So for example, if your child makes $2,000 this summer, they can only contribute up to their income amount of $2K but if they were to make say $10K, they can only contribute up to the max of $7K.
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▪ This contribution limit can change each year and there are income limits, so it is best to work with a Financial Planner to make sure you areinformed about the latest guidelines

▪ If you're a business owner, employing your child can offer additional advantages. Let's explore these benefits further in our upcoming meetings.

• Children under the age of 18 can participate in a Roth IRA, they would just need a parent, or another adult to be on the account as their guardian.
• The child’s earningsdo not have to be directly contributed to the Roth IRA, meaning the kids can keep their paychecks, and the parents can make the contribution on their behalf. However, instilling how important it is to designate a portion of each paycheck to savings a good habit to teach your kids at a young age.
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▪ For instance, they might invest a portion of their take-home pay, with you matching or investing the remaining allowable amount.

• Typically, the Roth IRA funds remainuntouched until retirement, but in certain situations you can access those funds earlier.
   

▪ You can withdraw your contributions from a Roth IRA at any time without taxes or penalties.

▪ To withdraw earnings from the account without taxes or penalties, the Roth IRA must be open for at least 5 years, and you must be age 59 ½ or older.

▪ You could also have access up to $10K in earnings + all your contributions for a first-time home purchase, after the account has been opened for at least 5 years.

We understand it can be overwhelming to know what steps to take, what accounts to open, what to invest in, and keep up with the ever-changing financial rules and guidelines… we are here to help guide you with our Elevate with Educo Financial Planning Process.
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