Do You Know How to Be a Fiduciary Parent?
A fiduciary is someone who works in the client’s best interest. If you substitute “children” for “client,” isn’t that what a parent does? As a parent, you are always looking for opportunities that will set your children up for future success.
This article from FiduciaryNews.com, “The Fiduciary Parent: The Ultimate Plan Sponsor Shouldn’t Overlook this Familiar Tool,” lays out the benefits of opening and contributing to a Child IRA for your children who are earning income. Whether your children have summer jobs, babysit occasionally, or have another source of income, this can be an effective way to set them up for financial success later in life. It’s also a great way to teach them now about the importance of investment and saving toward the future.
In the article, Marianela explains why she thinks Roth IRAs are the best option for children. “The account grows tax free and when you have very little income, you are not really looking for an income tax deduction,” she said. She goes on to explain that matching contributions to your children’s IRAs can be of great benefit, but warns “this Roth IRA contribution does count toward the maximum annual exclusion of $15K per year.”
We encourage you to read this article and learn more about how you can act as a fiduciary parent. If you would like to speak with an advisor about the best way to save your children’s income and prepare them for the future, contact us today.