By Bobbielynn Berry, Vantage Institutional Relationship Specialist
A Vantage Self-Directed Roth IRA account can help support our next generation’s education and financial literacy.
Do you have a child in your life able to or already earning an income? Have you considered establishing a Self-Directed Roth IRA as a way to save money for their college tuition? There is a tremendous correlation between longevity and education; hence, it is essential to discuss our youth’s higher education goals.
According to EAB’s enrollment services division, 40% of students turned down their first-choice college because of the financial obligation.
The College Board reported a moderate budget for an in-state public college, 2/3 less than the average sticker price charged at a private institution.
Our staff comprises parents considering ways to help instill the value of education and a strong work ethic to their beloved young family members. We understand time is not a renewable resource, so the earlier they get started, the better. Time is money, after all. Could a summer job help your child or grandchild fund their own Self-Directed Roth IRA?
In support of our next generation’s education and financial literacy, we encourage you to consider the benefits of a Vantage Self-Directed Roth IRA. Here’s why:
- The tax-free growth in a Self-Directed Roth IRA is similar to what you get within a dedicated college savings account.
- Money within a Self-Directed Roth IRA will not count when considering your child’s financial aid eligibility. (Any money withdrawn from a Roth IRA will count as income in the following year’s application for financial assistance)
- Earnings can be withdrawn without penalty for qualified higher education expenses, though they will be taxed as ordinary income. (Earnings are the amount above what you’ve contributed.)
- Withdrawals up to the amount of previously contributed earned income are tax-free, no matter the purpose. Under certain conditions, they can even be penalty-free.
- Self-Directed Roth IRA funds can be a valuable resource in later years, including a source of emergency funds, a house down payment (up to a point), or retirement withdrawals that always tax and penalty-free.
As with most things, rules are governing Self-Directed Roth IRAs. We welcome you to give us a call to speak with one of our IRA Specialists or with your tax professional to discuss this option further. Should this strategy benefit a child in your life, we encourage you to learn more from our knowledgeable team of IRA professionals.
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