Dental Boardroom Podcast

Blog By:
Practice Orbit

View More Episodes: https://podcasts.apple.com/us/podcast/the-dental-boardroom/id1518344747

In this episode of the Dental Boardroom Podcast, host Wes Read, CPA and financial advisor at Practice CFO, dives into one of the most powerful  yet often overlooked  tax and wealth-building strategies for dentists: putting your kids on payroll and using that earned income to fund retirement and education accounts.

Wes explains how hiring your children in your dental practice (for real, legitimate work) creates not only a tax deduction for the practice but also a springboard for long-term wealth accumulation in the child’s name. He emphasizes the Roth IRA as a uniquely flexible and tax-free account, often a better choice than a 529 education account, since the funds can be used for retirement, education, or other qualified purposes.

He walks through how to handle payroll logistics, funding contributions annually to simplify administration, and how compounding growth turns even modest contributions into hundreds of thousands  or even millions  over a lifetime. Along the way, Wes shares investment allocation strategies, including why volatile, high-growth assets fit well in Roth IRAs and how “tax location” across different account types can meaningfully boost after-tax returns.

The episode also compares Roth IRAs with 529 plans, outlining when each makes sense, and highlights the importance of aligning education funding with family philosophy  whether parents fully cover tuition, split costs, or expect children to pay their own way.

This is part one of a two-part series on the Kids on Payroll strategy, with part two focusing more deeply on 529 plans.

Key Points
 - Paying your kids from the practice creates a deductible expense and earned income for them.
 - A Roth IRA for children offers unmatched tax-free growth and flexibility versus 529 accounts.
 - Funding once a year avoids payroll admin headaches while still capturing the benefit.
 - Compounding can turn $7,000 annual contributions into millions over decades.
 - High-growth, volatile assets fit best in Roth accounts due to their tax-free nature.
 - Tax location (placing the right investments in the right accounts) is a major driver of long-term wealth.
 - Family philosophy matters  whether parents fully fund education or expect kids to share the cost.