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Your kids need a Roth IRA, the ‘golden egg’ savings vehicle

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2 years ago

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As a financial advisor mom of three kids, I know well the power of compounded interest and the value of early work experience and learning to save and invest for yourself. 

My kids — ages 15, 12 and 11 — have been tutoring, filing, shredding, sweeping, and even researching and creating infographics for friends and our own companies for a while.

This has not only helped them develop responsible work habits and meet deadlines around their usual school work and extracurricular activities, but it also gives them hands-on experience managing an income. It teaches them at an early age the value of saving for the future and prioritizing important goals such as retirement.

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For kids, that seems like eons away. But getting started early can offer tremendous advantages. Then, you might be wondering — like many of my clients do — what’s the best way to save for our kids?

I believe the answer is for them to save in their very own Roth individual retirement accounts.

How a Roth IRA for kids works

Yes, kids can have their own Roth IRA — and, just like for adults, the IRS rules are pretty straightforward. 

For 2024, the total contribution an individual under age 50 can make to any IRA account — whether Roth, traditional or some combination of the two — is $7,000. If someone’s earned income is less than that, they can contribute only up to the amount of income that they earned — no “gift money.”

While the child needs to have earned income to qualify for contributions, the money used to fund the Roth IRA can be contributed from someone else. This means the child can keep their earnings for immediate spending, while the Roth IRA is funded separately, helping them build a financial foundation without dipping into their own pockets.

Parents, grandparents or any generous relative or benefactor can set up a Roth IRA for a child. 

There’s no minimum age requirement for contributing to a Roth IRA; if a child can earn money, they can have a Roth IRA. 

But if the child is a minor — under age 18 in most states but under age 21 in some — a parent or guardian must open a custodial Roth IRA in the child’s name and manage the investments until the child reaches the age of majority. Although the custodian makes decisions on the account, the child is the beneficial owner, meaning the funds must be used for their benefit.

Personal Finance Tips 2024: Roth IRAs

More about those income requirements: To contribute to a Roth IRA, the child must have earned income. This income could come from traditional employment, such as a part-time job, or from self-employment activities such as babysitting or lawn mowing. Money received from parents for chores or as an allowance does not count, nor do cash gifts. 

Most kids, at least the younger ones, are unlikely to earn the $7,000 maximum allowable annual contribution for 2024 and are limited to the total amount they earned during the year. 

Even if the child is not required to file an income tax return, the parent or other custodian must still keep careful records of the earnings that are used to contribute to the Roth. Self-employment income might be subject to additional taxes such as Medicare and Social Security. It’s wise to consult a tax professional to ensure compliance and maximize benefits.

Why I like the Roth IRA for youngsters

I think of the Roth IRA as the “golden egg” savings vehicle for young people because not only is the account tax-sheltered, it also has the benefit of liquidity.

A Roth can be treated like the long-term savings vehicle it is designed to be, but in case of an emergency, since kids have decades ahead of them before retirement, there are ways to access the contributions without penalties or other drawbacks. 

Establishing a Roth IRA for youngsters is a powerful way to set them on the path to financial security. By starting early, they can take full advantage of the benefits of tax-free growth, potentially amassing a significant retirement fund by the time they reach retirement age.

There are other advantages as well. Contributions are made with after-tax dollars, so withdrawals during retirement can be tax-free, provided certain conditions are met. This is particularly advantageous for children, who are likely in a low or zero tax bracket now, which allows them to grow their investments without the burden of taxes.

In addition, starting early allows the account to benefit from decades of compound interest, significantly growing the balance over time. For instance, if a 15-year-old contributes $2,000 annually until age 65, with an average annual return of 7%, the account could grow to nearly $1 million. 

Unlike traditional IRAs, contributions to a Roth can be withdrawn at any time without penalties or taxes, and under certain circumstances, even earnings can be withdrawn without penalties for a first-time home purchase, for example.

As another benefit, unlike traditional IRAs, Roth IRAs do not require withdrawals at a certain age, allowing the account to continue growing tax-free for as long as the owner chooses. This gives young people more control over their retirement funds and can be advantageous in managing their retirement income.

Furthermore, starting a Roth IRA can help young people learn about investing, saving and financial planning from an early age. The structure of a Roth IRA encourages a long-term outlook on finances, helping young people build a secure financial future.

— By Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners. She is also a member of the CNBC Financial Advisor Council.

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Personal Finance

$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

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7 days ago

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August 8, 2026

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The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

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Personal Finance

Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

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1 week ago

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August 7, 2026

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Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

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Personal Finance

Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

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2 weeks ago

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August 1, 2026

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As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

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