Kid Roth IRA

Securing Tax Free Wealth from a Child's First Paycheck

Money Answers for Employed Children, Their Parents, the Self-Employed and Entrepreneurs

With the economy changes occurring in the Fall of 2008, allowances are being cut and more and more children are looking for employment. On December 15, 2008, Lisa W. Foderaro covered the issue in her New York Times article concerning Teenagers Feel the Crunch which shows how kids accross the nation are having to adjust to new economical situations.

Lost opportunity can be both financially and emotionally painful. Lost means gone! You can never get it back again. Every year you wait to start a Roth IRA for kids, you lose another opportunity for tax-free compounded earnings and you can never get that opportunity back. Let's show kids how to maximize the opportunity for tax free compounding interest by teaching them to open a Roth IRA. The Kid's ROTH IRA Handbook is a starting point to become educated on how to start a Roth IRA for kids from the very first paycheck. It instills the sense of urgency that once kids have a job, the next immediate step is to begin a Roth IRA for kids, even if it is only a small contrbution.

This book includes a quick reference guide to applicable IRS Publications to stay informed on current rules as well as a recommended reading list of financial books for kids.

roth ira for kids Back Cover of Book

The Kid's Roth IRA Handbook:
Answers for employed children, their parents,
the self-employed and entrepreneure

Inside this Individual Retirement Account book:

  • Money Management: Understand the benefits of a Roth IRA
  • Career Skills: Identify different types of child employment
  • New Ideas: Discover ways parents can employ their children
  • Special Details: Hear how to issue a W-2 for a working child
  • Understand Taxes: Concepts for kids with low earned income
  • Powerful Knowledge: Understand IRA contribution rules
Click Here to Order

 
6x9 inches, paperback,
2008 ISBN: 0-9708226-9-3

You Can Borrow for College - You Can't Borrow to Retire!

The Kids Roth IRA Handbook: Securing Tax Free Wealth from a Child's First Paycheck
Money Answers for:

  • employed children
  • their parents
  • the self-employed
  • entrepreneurs (both parent and child)

TABLE OF CONTENTS:

  • PREFACE
  • HOW TO USE THIS HANDBOOK
  • THE DECISION
  • WHERE IS YOUR MONEY?
  • OBTAINING EARNED INCOME
    • What Type of Job Can You Do?
    • Job Type 1: Employer-Employee Relationship
    • Job Type 2: Employed in Your Parent's Business
    • Job Type 3: Household Employee for Your Parents
    • Job Type 4: The Self-Employed Child
  • ROTH IRA ISSUES
    • The Time Value of Money
    • The Value of a Tax-Free Account
    • What is your Comfort Zone?
    • IRA Rules and Limits
    • Pay Yourself First!
    • Hands off the Roth!-Withdrawals
    • The IRA Gift & the Inherited IRA
    • What about Financial Aid for College?
    • What about 529 Plans, Bonds, or Other Investments?
  • TAX TALK-ALL ABOUT FORMS
    • How to Complete a Form W-4
    • The Form W-2, Wage and Tax Statement
    • Tax Overview-Use Form 1040
    • Taxes for Job Type 1: Employer-Employee Relationship
    • Taxes for Job Type 2: Employed in Your Parent's Business
    • Taxes for Job Type 3: Household Employee for Your Parents
    • Taxes for Job Type 4: Self-Employed Child Providing a Service
    • Taxes for Job Type 4: Self-Employed Child Selling Products
    • How Parent Employers Provide a Form W-2 Using the Internet
  • CHILD EMPLOYMENT EXAMPLES
  • FREQUENTLY ASKED QUESTIONS
    • Challenge Questions
  • APPENDIX
    • INCOME SHEET
    • EXPENSE SHEET
    • SALES SHEET FOR THE SELF-EMPLOYED
    • HOUSEHOLD JOB DESCRIPTION EXAMPLE
    • ROTH IRA CONTRIBUTION SHEET
    • MORE EDUCATIONAL FINANCE BOOKS
    • STRATEGY, BARGAINING, & INVESTMENT GAMES
    • MONEY RELATED WEBSITES
    • PLACES TO OPEN A ROTH IRA FOR A MINOR
  • GLOSSARY
  • BIBLIOGRAPHY & INTERNET RESOURCES
  • INDEX

Frequently Asked Questions

  • What age group is this book for?
    The rules in The Kids Roth IRA Handbook can be applied to all working children, such as a baby model, babysitter, or cashier at a fast food restaurant. Children as young as 9 have read the book and they would need more assistance than a 12 or 16 year old. We recommend you plan to assist your child as needed to explain more complex areas of the book. The book is to be used as an interactive tool between parents and children. Parents should use the book to assist younger children.
  • How old do you have to be to contribute to a Roth IRA?
    There is no age limit to contribute to a Roth IRA for kids.
  • Do kids have to have earned income to contribute to a Roth IRA?
    Yes. Kids cannot use gift money. Sorry Grandma! Actually, everyone, including adults (or their spouse), must have earned income (or their spouse has earned income) to contribute to a Roth IRA.
  • Does my babysitting money count as earned income?
    Absolutely and The Kids Roth IRA Handbook will provide references where you can verify this.
  • Can parents employ their kids in the parent's self-employed business?
    Yes, you can and let The Kids Roth IRA Handbook give you the guidance on how to do it right. You must keep track of hours worked and issue a Form W-2.
  • Can parents employ their kids as a "household employee"?
    Yes and The Kids Roth IRA Handbook shows you how!

How would the nation change if every kid had a Roth IRA?
From the Author of The Kids Roth IRA Handbook:

When my child was in 5th grade she came home with an assignment to write a letter asking her parents to pay her for tasks done around the house.

"Hmmm... Sounds like an interesting assignment but you're not getting paid for it," I answered half annoyed that a teacher dare suggest that I start paying my kids, but also impressed that someone had finally assigned something to do with money.

Next, she came home with, "I have to research what college I will go to, what work I will do, and what car I will buy. I'm going to Harvard and I will be an author."

"Hmmm... You might need an additional job as well -- to pay off that school loan," I grinned as I had some knowledge of author salaries.

Weeks later she enthusiastically told me, "Mom, you need to get an IRA."

Ok, that was the last straw! Who's been talking to my daughter?

I've told this story to many friends except, I usually begin, with, "My 5th grader told me I needed an IRA!" I watch their jaw drop that a 5th grader is even thinking about finances, "How does she know about that?"
"Thank her English teacher," I reply. (Yep, it wasn't even a math class assignment!)

Well this class of my daughter's was a rare case! While we all expect our children to be financially responsible, there is no class for it in the younger school grades. Did you know some colleges do not even require an economics or accounting class to graduate? We hear a lot about our literacy rate across the nation but how about our financial literacy? How would the nation change if every child had a Roth IRA?

Being self-employed as a self-published author, I was already very familiar with taxes as well as the requirement for "earned income" to contribute to a Roth IRA. In my networking groups, I heard members speak of hiring their children, which lead to my taking the dive into the IRS Publications to learn how establishing a Roth IRA for kids was legally accomplished. The result was the answers to three major questions:

  1. Can small jobs count as earned income for the purpose of contributing to a Roth IRA for kids?
  2. What are the requirements for a self-employed parent to hire their child?
  3. What are the requirements for parents to make their kids "household employees"?
While these are all addressed in the book, the real lesson of the book is to begin to inspire children to save at a very young age and teach the benefits of compounding interest in a tax free account such as a Roth IRA for kids. Certainly we do not want to take "being a child" away from children. But if they already show interest in finances and we are allowing them to earn spending money, we have a responsibility to teach them what to do with... at least part of their earned money.
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