I want you to take a moment to think about how you can generate tax-free wealth for your kids. For most people, two primary vehicles come to mind: the first is a Roth IRA, and the second is a 529 account.
But here’s the issue—most kids don’t have earned income, so they can’t contribute to a Roth IRA, which takes that option off the table.The second option, a 529 account, can only be used for qualified education expenses. If the funds are used for anything else, the earnings will be subject to ordinary income taxes and a 10% penalty.
As a financial planner who works closely with families of young children looking to build wealth, I’ve found that most parents want to generate tax-efficient wealth for their kids, but they don’t want to feel limited to education-related expenses.
Today, I’m going to break down how you can achieve this using a custodial brokerage account. Trust me—you don’t want to miss it!
Key Topics:
- Generating Tax-Free Wealth For Your Kids (00:00)
- Why People Often Ignore UTMA / UGMA Accounts and Understanding Kiddie Tax (01:50)
- Turning a Custodial Brokerage Account into a Tax-Free Vehicle (03:30)
- Customizing this Strategy for Your Own Financial Plan (05:03)
- Money in a Custodial Brokerage Account is Considered an Irrevocable Gift (07:07)
This Episode is intended to be financial education only and is not intended to be specific tax, legal, or investment advice. Please consult a professional for specific advice.
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If you need specific advice, you can contact us at Advice@mdrnwealth.com or at: https://www.mdrnwealth.com
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