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White Coat Investor Podcast
WCI #354: Mega Backdoor Roth Contributions with Minimal 1099 Income
Feb 15, 2024
33:12
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In this podcast, they answer questions about 529s and taxes on rollover IRA contributions. They also discuss Mega Backdoor Roths and compare UTMA vs. parental brokerage savings for minors. The episode is sponsored by SoFi, helping medical professionals with loan refinancing and payment plans. They emphasize striving for high achievement, maximizing retirement savings, and promoting financial literacy.
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Quick takeaways
- Using a UTMA account for saving for minors provides tax advantages but requires relinquishing control over the money.
- Matching campaigns in charitable giving may not result in additional funds for the charity, serving more as a marketing opportunity.
Deep dives
Maximizing Contributions and Tax Benefits for UTMA Accounts
When it comes to saving for minors, there are benefits and disadvantages to using a UTMA account versus a parental brokerage account. With a UTMA account, you relinquish control over the money, as it becomes the child's property. However, you gain certain tax advantages, such as the money being taxed at the child's lower tax rate. UTMA accounts are subject to the kitty tax, but they can be a good option if you want to give your child a head start with investments and financial education. Opening multiple UTMA accounts for different children is possible, and each child can receive gifts up to the annual IRS gifting allowance. However, the tax treatment of UTMA accounts depends on various factors, so it's important to consult a financial advisor for personalized advice.
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