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Tax Smart Real Estate Investors Podcast cover image

284. The Triple Tax Benefits of Paying Your Children

Tax Smart Real Estate Investors Podcast

NOTE

Exploring Education Savings: 529 Plans vs. Roth IRAs for Children

529 plans serve as a dedicated savings tool for children's education, applicable for certain K-12 expenses, and allow fund transfers between siblings if some do not pursue college. However, Roth IRAs offer greater flexibility, allowing contributions that can be accessed without tax consequences in retirement. Establishing Roth IRAs for children early enables compounding benefits, significantly enhancing retirement savings potential. Contributing to a Roth IRA can begin as early as nine years old, providing a substantial head start on investment growth. Proper money management is essential; funds should move from a business account to the child's account before being deposited into the Roth IRA, ensuring a clear financial record. This approach emphasizes the importance of early investment and strategic financial planning for future options beyond traditional education paths.

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