Latest news with #RothIRAs
Business Insider
11-08-2025
- Business
- Business Insider
I'm a millionaire dad who started investing for my 3 kids when they were born. Here's my advice for other parents.
This as-told-to essay is based on a conversation with Daniel Ramsey, the 47-year-old founder of MyOutDesk in Sacramento, California. It has been edited for length and clarity. I'm the CEO and founder of MyOutDesk, a virtual assistant company that has served more than 8,000 companies. I'm also the founder and CEO of the nonprofit MOD Movement, a nonprofit dedicated to equipping communities with the essentials in education, housing, and economic empowerment. Growing up in poverty fueled my career resilience as a serial entrepreneur. I founded MyOutDesk in 2008 after working in real estate and realizing that business owners were drowning in necessary administrative tasks. While initially a real-estate professional, contractor, developer, and mortgage broker, I sold and divested my other businesses to focus solely on MyOutDesk. My net worth is around $100 million, and I make more than $1 million a year in salary. I'm both saving money for my children, ages 4, 9, and 12, and teaching them how to invest properly. I share my entrepreneurial tenacity to help guide my children's futures I've learned the importance of time and compounding interest. If I could go back to my 18-year-old self, I would've put part of every check into a brokerage account, like an IRA. Had I done that, my net worth would likely be double what it is. All three of my children have brokerage accounts with Roth IRAs. They also have their own bank accounts and opportunities to earn money. They have their own savings accounts where they save their money: 1/3 for savings, 1/3 for spending, and 1/3 for a charitable cause. I believe the Roth IRA serves as an exercise to teach the kids to set aside money and see how fast it will grow with compound interest over time. We discuss as a family how this creates significant gains over time. They already make investment decisions to set them up for long-term success Each year since starting the accounts for them, I've contributed the maximum allowed for a Roth IRA, which is $7,000 for 2025. Since our kids were young, they have created ways to earn money. Our job as parents is to show them slowly how to manage money and investments. My eldest, for example, has invested in Disney since she was 5. She also owns shares of Amazon and Berkshire Hathaway. When she receives her paycheck, I sit with her to invest in her Roth IRA and discuss her next investment. By about the age of 13, we'll start allowing our children to take over some of their finances and make decisions with parental guidance. (We don't allow them to invest in companies we don't agree with as of now.) This will help give them the autonomy they crave and teach them to make financial decisions and mistakes on their own so they're prepared when they reach adulthood. Here's my best advice for parents setting up investment accounts for their kids Prioritize togetherness and education, both financial and emotional. While creating a financial umbrella can be helpful, it's far more beneficial to teach them strong core values, ensuring they know how to work hard and be good people. Social, intellectual, relational, and emotional capital are vital to raising independent and successful children who can properly manage their money. Financial education is also important. Wealth can be a weapon or a tool, and without the proper knowledge, it can be very destructive. When I set up investment accounts for my children, I spent time helping them understand what to do with their money and how to use this wealth to serve others, making sure they use money as a tool that meets their values. Make sure your kids know their investment options, too The most common mistake I see parents make is failing to educate their kids on the choices they're making and the accounts they're selecting. First, parents have to understand the account they are making. A Roth IRA, for example, is in the kid's full control when they turn 18. If they aren't educated on wealth management, they can easily blow through their investments. Conversely, a trust in which the parent has complete control can feel too restrictive for your child as they enter adulthood. Ultimately, it's important to include and inform your children from an early age to ensure a smooth transfer of wealth and that they honor this incredible gift. We started an annual daddy-daughter trip with our kids at six, customizing each trip to our child's interests My eldest is intellectual, but my middle child is more experiential, so I meet them where they are. This trip is a chance to connect and have these early — and regular — conversations about money that are age-appropriate. As they get older and become more self-actualized, I increase the level of conversation. My oldest invested in Disney when she was 5, and I took her to her first shareholders' meeting and introduced her to the stock market. Here, she was able to ask Bob Iger a question, which piqued her interest in investing. We do talk about investments that are in their Roth IRA as a family. We have an annual trip to Disneyland, where they can act, touch, and feel the company, and give us a chance to discuss the stocks and investments. 10 years ago, I knew nothing about generational wealth I was determined to raise my children to be responsible humans who were empowered to pursue what they loved while being contributing members of society. I also didn't want my wealth to hinder their future. Since then, I've read many books on wealth, such as " Rich Dad Poor Dad" and "The Richest Man in Babylon," listened to every podcast I could find, such as "Acquired" and "All-In-Podcast," and met with peer groups of ultra-high-net-worth individuals through R360 Global. In the beginning, I was looking for a shortcut, but I kept coming back to education. While there are no shortcuts, one of the most important lessons I've learned is that a financial umbrella will only take your children so far. Embracing those core values, spending time with them, and teaching them what to do with their money when they have it is far better than simply creating an investment account.
USA Today
02-06-2025
- Business
- USA Today
Virtus Wealth Management Highlights Roth IRA Advantages for Long-Term Tax Efficiency
Virtus Wealth Management has launched an educational effort to increase Texas investors' awareness of the potential long-term tax benefits of a Roth IRA. Through this initiative, the firm aims to help individuals better understand how Roth IRAs may fit into a broader retirement strategy. As part of the outreach, Virtus Wealth Management Roth IRA resources are available to address frequently asked questions and misconceptions about this type of retirement account. Unlike traditional retirement savings vehicles, Roth IRAs offer the potential for tax-free qualified withdrawals in retirement and do not impose required minimum distributions (RMDs) during the account holder's lifetime. According to Virtus Wealth Management, these features can make Roth IRAs a powerful tool for those seeking long-term tax efficiency and flexibility. The firm notes that tax diversification in retirement planning continues to grow in importance as legislative and tax policy changes remain a consideration for many high-income earners and business owners. Roth IRAs are funded with after-tax dollars, meaning that contributions do not provide an immediate tax deduction. However, under current tax law, qualified withdrawals—which include earnings—are not subject to federal income tax. This may present advantages for those who anticipate being in a higher tax bracket during retirement or who want to preserve more control over taxable income later in life. Additionally, because RMDs are not required, Roth IRAs may give investors greater control over their withdrawal strategies, including legacy and estate planning considerations. A spokesperson for the firm, Brian Tillotson, explained the rationale behind this educational initiative. 'There's a lot of confusion about when a Roth IRA makes sense and who benefits most,' said Brian Tillotson. 'This initiative is meant to clarify the potential tax advantages and help people understand that suitability depends heavily on personal goals, income level, and retirement horizon.' Virtus Wealth Management emphasizes that Roth IRAs may not be ideal for every investor. Eligibility for direct contributions is subject to income limits, and specific criteria must be met for withdrawals to be considered qualified and tax-free. For those who exceed the income thresholds, strategies such as Roth conversions may be considered, although these come with their own set of implications that must be carefully evaluated. The firm encourages individuals to seek guidance from licensed professionals to explore what role, if any, a Roth IRA should play in their overall retirement strategy. The firm's educational approach is grounded in the principle that informed decision-making leads to better outcomes. Roth IRAs may serve as an essential complement to traditional retirement accounts by offering flexibility in managing future tax liabilities. For families focused on intergenerational wealth transfer, the absence of RMDs can allow Roth IRAs to remain untouched, potentially growing for longer and being passed to heirs under favourable tax conditions. Tillotson says, 'The long-term tax efficiency of a Roth IRA is not just about avoiding taxes—it's about having more options. Whether someone is concerned about future tax hikes, seeking to lower taxable income in retirement, or trying to leave more for heirs, a Roth IRA may provide flexibility that other accounts do not.' Virtus Wealth Management's focus on Roth IRA education comes when many Texans are reassessing their retirement preparedness and exploring how to mitigate potential future tax burdens. With growing concerns about inflation, longevity, and changes to Social Security, the ability to create a tax-diversified retirement income strategy is becoming more valuable. The firm maintains that informed planning should involve looking beyond pre-tax contributions and considering how different account types will be taxed once distributions begin. This educational push is aligned with Virtus Wealth Management's broader commitment to financial literacy, risk awareness, and customized planning for its clients. While the firm does not prescribe a one-size-fits-all approach, it seeks to arm investors with the tools and knowledge to ask the right questions and consider the whole picture when making retirement planning decisions. Additional resources and guidance can be found on the Virtus Wealth Management website at for individuals and families seeking to understand whether a Roth IRA is appropriate for their retirement goals. Investors are encouraged to consult a licensed advisor to assess their unique financial situation and determine how a Roth IRA may fit into a comprehensive retirement strategy.
Yahoo
19-05-2025
- Business
- Yahoo
Vincent Chan Shares How People In Their 20s Can Build Wealth On Autopilot: 'You Can Pretty Much Forget About It Until You're 60'
Building wealth is a long-term journey. You have to diligently save and invest money over many years. However, modern banking tools make it easier to build a big nest egg on autopilot. You don't have to make each deposit into your stock portfolio or spend too much time monitoring the market. Financial guru Vincent Chan lays out a path where people in their 20s can become millionaires by the time they retire. However, since the strategy is on autopilot, it gives you time to focus on other things. "You can pretty much forget about it until you're 60," Chan states. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – This claim only applies once you have the autopilot strategy in place. Here's how you can start building wealth without having to check your bank account every day. Chan starts the video by recommending that his viewers open a Roth IRA at an established brokerage firm like Fidelity, Vanguard, or Schwab. Roth IRAs allow you to grow money tax-free, so you won't have to worry about capital gains when you retire. These top brokerages offer simple user experiences that allow you to find what you need. They also have various financial services beyond Roth IRAs that can help you build wealth. It's pretty easy to open a Roth IRA, and you don't have to be employed to get started. It works great for freelancers or individuals who want to contribute additional funds to a new retirement plan. Contributing to a Roth IRA does not affect your ability to contribute to an employer-sponsored retirement plan. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — The next step in this autopilot plan is to transfer $7.20 to your Roth IRA every day. Keep in mind that this money will be taxed, but you won't pay taxes when you withdraw it. Contributing $7.20 per day to a Roth IRA results in $2,628 per year for years with 365 days. However, you can contribute much more than $2,628 per year. The IRS currently limits taxpayers to an annual $7,000 contribution to a Roth IRA. However, anyone who is 50 years or older can contribute an additional $1,000 per year to their Roth IRA. If you want to contribute $7,000 per year, you will have to transfer $19.17 per day. People who qualify for an $8,000 annual contribution should invest $21.91 per day. The IRS periodically raises the maximum contribution limits, so it's good to stay updated and adjust your daily transfer accordingly. If daily transfers are too stressful, you can also opt for weekly or monthly encourages his audience to keep it simple and invest in an S&P 500 fund. He mentions the SPDR S&P 500 ETF Trust (NYSE:SPY) and the Vanguard S&P 500 ETF (NYSE:VOO) as potential choices. Notably, VOO only has a 0.03% expense ratio while SPY has a 0.09% expense ratio. VOO is technically cheaper to own, and both funds deliver nearly identical returns. Chan mentions that the S&P 500 usually goes up by 7% to 10% per year. The S&P 500 automatically diversifies your money across the 500 largest profitable corporations. Companies are added or removed to the index based on their performance. It's a market-weighted index, so the tech giants will have more preference than companies with market caps just above $20 billion. Read Next: The team behind $6B+ in licensing deals is now building the next billion-dollar IP empire — 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? This article Vincent Chan Shares How People In Their 20s Can Build Wealth On Autopilot: 'You Can Pretty Much Forget About It Until You're 60' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
14-05-2025
- Business
- Miami Herald
‘MAGA accounts' may be a great way to kickstart your kids' savings
The proposed House Ways and Means tax bill introduces a new type of investment account that could change how American families save for their children's future. The legislation includes a provision to create a new tax-advantaged savings vehicle called the Money Account for Growth and Advancement, or what's being referred to as a "MAGA" account. These accounts, according to Ben Henry-Moreland, a senior financial planning nerd at aim "towards encouraging parents to provide some savings to their children that they can later use to go to college, start a business, or buy a home as young adults." Related: Social Security income tax cuts may include a huge new deduction for retirees The proposal, according to some, including the Investment Company Institute, the lobbying group for the mutual fund industry, represents a significant addition to the landscape of tax-advantaged accounts available to American families. It would join familiar vehicles like 529 plans, ABLE accounts, Roth IRAs, and custodial accounts. Don't miss the move: SIGN UP for TheStreet's FREE daily newsletter "The inclusion of the new "money accounts for growth and advancement" would foster a culture of investing among young people," the ICI said in a statement. "The accounts will help put a generation of young Americans on track to a lifetime of financial security as they see the power of compounding first-hand." UnSplash Jeffrey Levine, the chief planning officer at Focus Partners, stated on X that the accounts can be established for beneficiaries under age 8. He added that "new contributions would be accepted beginning in 2026 for beneficiaries ('beneficiary' similar to a 529 plan) under 18." There's a $5,000 maximum annual contribution, which is inflation-adjusted, according to Levine. No distributions, according to Levine, are allowed before the beneficiary's age 18, and "distributions from 18-24 are limited to 50% of the beneficiary's age 18 value." Related: How the IRS taxes Social Security income in retirement Of note, "when the account beneficiary turns 31, the account is terminated and fully distributed to the beneficiary," according to Henry-Moreland. According to Levine, investments "MUST be invested in the 'stock of a regulated investment company' that invests in diversified U.S. equities, does not use leverage, and 'minimizes fees and expenses.'" The tax treatment of these accounts creates a hybrid model that borrows elements from several existing account types. Henry-Moreland points out that "there's no tax deduction for contributing" to these accounts, placing them in the same after-tax contribution category as Roth IRAs and 529 plans. Unlike Roth IRAs, which require the account owner to have earned income, MAGA accounts would share a key feature with 529 plans by not imposing an earned income requirement for contributions. This flexibility would allow parents, grandparents, and other interested parties to fund these accounts regardless of the child beneficiary's employment status. Levine also notes that "distributions of principal would be tax-free" when withdrawals are made. What's more, "distributions used 'exclusively' for 'qualified expenses' would be a capital gain for the distributee," providing some tax advantages for specific uses, said Levine. Ordinarily, a distribution from a traditional IRA would be taxed as ordinary income while distributions from a 529 plan used for qualified education expenses are exempt from federal income tax. According to Levine, "all other distributions (from a MAGA account) would be ordinary income and, if the beneficiary is under 30, subject to an additional 10% penalty," creating a disincentive for early withdrawals unrelated to the account's intended purposes. Qualified expenses would include higher education costs, purchase of a primary residence by a first-time homebuyer, expenses related to a small business that has taken a small business loan, and post-secondary credentialing costs. To encourage adoption, the bill includes a pilot program that provides a $1,000 refundable credit from the Treasury Department-automatically deposited into a MAGA account-for every child born between Jan. 1, 2025, and Dec. 31, 2028, according to Robert Westley, regional wealth advisor at Northern Trust. Henry-Moreland described the initiative as an effort by Congress to "jumpstart the use of these accounts by establishing and funding a $1,000 MAGA account for each U.S. citizen born during that period." Related: Social Security pays U.S. workers $14.8 billion retirement windfall Despite the government's attempt to incentivize these accounts, financial planning experts remain skeptical about their relative value compared to existing options. "I don't honestly see much benefit in having a MAGA account," said Henry-Moreland. "Taxable custodial accounts have more flexibility and are nearly identical from a tax perspective, but don't have any tax penalties for nonqualified distributions, while Roth IRAs and 529 plans are more restrictive in how they can be used, but have much better tax benefits. And it's hard to argue that we need yet another type of tax-preferenced account with its own set of rules and restrictions to navigate." Others share that point of view. With government seed money, MAGA accounts provide a head start on savings that is not offered by 529 plans, IRAs, or other custodial accounts, said Westley. However, MAGA accounts come with fewer tax advantages and more withdrawal restrictions as compared with other types of accounts," he said. To be sure, the proposed legislation is part of ongoing efforts to address the financial preparedness for young Americans entering adulthood with significant expenses ahead. The proposal comes at a time when higher education costs continue to rise, housing affordability presents challenges for first-time homebuyers, and young entrepreneurs face barriers to starting businesses. Still, experts question whether this solution offers advantages compelling enough to warrant adding yet another specialized account type to America's already complex financial landscape. Related: The 9 worst states for Social Security income taxes Learn more about 529 plans. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
13-05-2025
- Automotive
- Yahoo
Would You Buy A Car With Your Roth IRA? Suze Orman Calls It 'The Worst Financial Advice I've Ever Heard'
Using a Roth IRA to buy a car might sound like a smart move if it means avoiding debt. But financial expert Suze Orman says it's one of the worst things you could do with your retirement savings — and she didn't hold back when a podcast listener asked about it. On a recent episode of her "Women & Money" podcast, Orman responded to a listener named Sarah, who asked if she should tap her Roth IRA to buy a new car. Don't Miss: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Sarah had been driving her 2003 Honda Accord for nearly two decades and had finally decided it was time for an upgrade. She was approved for a $25,000 car loan with a 5.95% interest rate but wondered if she should skip the loan and take money from her Roth IRA instead — penalty-free — using only her principal contributions. Her financial adviser said she could withdraw the funds without a penalty since the account had been open for at least five years and she was only taking out contributions. Sarah is 47 years old and earns around $90,000 a year. She has about $400,000 in retirement savings, $13,000 in cash, and contributes regularly to her savings and retirement accounts. Orman didn't mince words. "That is the worst financial advice I've ever heard in my life," she said, calling out the adviser's misunderstanding of Roth IRA withdrawal rules. Trending: Many are using retirement income calculators to check if they're on pace — She clarified that while it's true Roth IRA contributions – not earnings – can be withdrawn at any time without taxes or penalties, the five-year rule does not apply to original contributions. That part of the adviser's advice, she said, was flat-out wrong. But more importantly, Orman emphasized the long-term cost of pulling from retirement to pay for a car. "If you were to have left that $25,000 in there at just a mere 8% annual average rate of return for 25 looking at $171,000 tax-free," she explained. "That's what your financial adviser is telling you that you should spend on this car." Instead of touching the Roth IRA, Orman recommended taking the auto loan. She noted that if Sarah financed the $25,000 over three years at 5.95%, her monthly payment would be around $760, with a total interest cost of about $2,300. In her view, that was a far better option than sacrificing decades of compound growth in a tax-free retirement account. Orman also pointed out that Sarah's $13,000 in liquid savings should remain untouched as an emergency fund — not used for a car down payment or extra loan moment served as a cautionary tale not just about Roth IRAs, but about relying too heavily on advice that might not be well-informed. "You go and ask experts what you should do with your hard-earned money," Orman said. "You trust them." Her final suggestion? If your financial adviser recommends using your Roth IRA to buy a car — it might be time to find a new one. Read Next:Nancy Pelosi Invested $5 Million In An AI Company Last Year — Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Would You Buy A Car With Your Roth IRA? Suze Orman Calls It 'The Worst Financial Advice I've Ever Heard' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
