A Roth IRA is a great retirement investment instrument for children and adults. A Roth IRA retirement account is funded using after-tax dollars. You can then enjoy tax-free growth in your investment and eliminate withdrawal fees during retirement.
Retirement planning is a thought that rarely crosses a person’s mind when raising a child. However, if you are having thoughts of accelerating the potential of building your child’s wealth, a Roth IRA is the tool you need. Here are some benefits you can tap into once you open a Bitcoin IRA for your child.
Start saving for them
A Roth IRA does not have age restrictions and allows your child to start contributions as soon as they start earning. You can also contribute funds into your child’s IRA provided you don’t exceed the annual limit or your child’s earned income.
A Bitcoin Roth IRA from Viva Capital beats other saving options for your child as the child can take advantage of the compounding. Hence it provides a smart way of saving and earning more money.
Set your child up for investment
A Bitcoin Roth IRA provides a platform for your child to start investing in their favorite companies and exchange-traded funds. It offers more control over investment choices and makes it possible to create a diversified portfolio. Such investment decisions work to supercharge your child’s portfolio potential.
Let’s say your 11-year-old child makes a $6,000 contribution to their Roth IRA every year, If the amount earns a 7% annual rate, the account will be worth more than $83,000 when they turn 21.
A Roth IRA is different from a traditional IRA in the sense that there is no Required Minimum Distribution (RMD) when the owner reaches retirement age. Moreover, you can make your contributions a lifetime activity provided you are earning income.
Settle important payments
Opening a Bitcoin Roth IRA for your child creates an opportunity to save and multiple money that you can use for your child’s college fee. Using a Bitcoin Roth IRA as part of your child’s investment plan provides flexibility on how to spend it.
The raised funds are penalty-free and can also serve the purpose of purchasing or building a new home for your child when they grow up. You can also withdraw any amount contributed to a Roth IRA at any time.
Protects your child’s future
A Bitcoin Roth IRA provides diversification for building your child’s wealth by ensuring they do not solely depend on the money they earn from their career. How your child will choose to allocate their money plays a significant role in their future financial security.
What are the income requirements for a Roth IRA?
If you want to open a Roth IRA for your child, you must earn income. Your child, the account holder, must be making less than $140,000 annually. If your child earns less than $125,000, they are allowed to contribute $6,000 annually to a Roth IRA.
As a parent, you can hire your child “on the books” to perform household chores, including babysitting, housework, shoveling snow, and more. Your child can then use the income they earn to contribute to their Roth IRA.
The IRS pays attention to your child’s age. Infants and toddlers are not likely to work on any business task unless the business has a legitimate need for them.
How do you open a Bitcoin Roth IRA for your child?
As an adult, you can open an account for your child. You will have sole access to the account because your child is a minor, but the account is transferred over to the child when they come of age. A Roth IRA can be opened by a brokerage firm using an automated method to accurately set up the account.
Choosing the right brokerage firm to contact for a Roth IRA is dependent on you as an investor and your preferences.
Are you ready to open a Bitcoin Roth IRA for your child?
Consider the benefits explained above and evaluate if they make sense for the goals you have for your child and both your and your child’s financial situation. Remember, the sooner you open a Roth Ira and start contributing to it, the more time your child will have to build great wealth.