Retirement account for kids?
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I think it would be really cool for an 18 year old kid to see a balance that has grown through their lives, at a manageable rate of saving from their parents. They wouldn't get that piece of personal data if it was money tucked away with the rest in their folks' IRA.
@Horace said in Retirement account for kids?:
I think it would be really cool for an 18 year old kid to see a balance that has grown through their lives, at a manageable rate of saving from their parents. They wouldn't get that piece of personal data if it was money tucked away with the rest in their folks' IRA.
Aside from the financial benefit to them, showing the kid(s) what compound interest can really do over 18 years is a life lesson I want them to learn quickly. I learned it later than I wanted to, but not too late.
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Thanks for all the replies. A few responses:
@Jolly our retirement is (being) funded and on a good trajectory. The cash I'm referring to here is what is currently bouncing around in savings or taxable investment accounts. (i.e., money to invest and not needed in case of emergency)
@Axtremus - The custodial accounts won't work because they require the minor to have earned income. But UTMA is intriguing... basically an investment account that turns over to the minor when they are 18 or 21.
@jon-nyc - Our 529s will likely be overfunded as well, so I'll need to keep an eye on it. From what I can tell, you can transfer up to $35k (or $6500 a year) into a roth IRA but otherwise yeah there are taxes (and 10% penalty?) for excess withdraw. Not sure I want to complicate things by worrying funding my grandkids' generation yet, LOL.
Of course whether it's 18 or 60 years from now, the idea of what a dollar will be worth then is a big scary. For example, $100 today will be the same as $154 in 18 years, or $344 in 60 years.
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Thanks for all the replies. A few responses:
@Jolly our retirement is (being) funded and on a good trajectory. The cash I'm referring to here is what is currently bouncing around in savings or taxable investment accounts. (i.e., money to invest and not needed in case of emergency)
@Axtremus - The custodial accounts won't work because they require the minor to have earned income. But UTMA is intriguing... basically an investment account that turns over to the minor when they are 18 or 21.
@jon-nyc - Our 529s will likely be overfunded as well, so I'll need to keep an eye on it. From what I can tell, you can transfer up to $35k (or $6500 a year) into a roth IRA but otherwise yeah there are taxes (and 10% penalty?) for excess withdraw. Not sure I want to complicate things by worrying funding my grandkids' generation yet, LOL.
Of course whether it's 18 or 60 years from now, the idea of what a dollar will be worth then is a big scary. For example, $100 today will be the same as $154 in 18 years, or $344 in 60 years.
@89th said in Retirement account for kids?:
@Axtremus - The custodial accounts won't work because they require the minor to have earned income. But UTMA is intriguing... basically an investment account that turns over to the minor when they are 18 or 21.
The ones I linked to accept unearned income (e.g,, gifts from parents).
Custodial IRA or custodial Roth IRA have tax advantages and are limited to earned income. But the ones I linked to are no retirement account, there is no tax advantage, so they are not limited to earned income.
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Thanks for all the replies. A few responses:
@Jolly our retirement is (being) funded and on a good trajectory. The cash I'm referring to here is what is currently bouncing around in savings or taxable investment accounts. (i.e., money to invest and not needed in case of emergency)
@Axtremus - The custodial accounts won't work because they require the minor to have earned income. But UTMA is intriguing... basically an investment account that turns over to the minor when they are 18 or 21.
@jon-nyc - Our 529s will likely be overfunded as well, so I'll need to keep an eye on it. From what I can tell, you can transfer up to $35k (or $6500 a year) into a roth IRA but otherwise yeah there are taxes (and 10% penalty?) for excess withdraw. Not sure I want to complicate things by worrying funding my grandkids' generation yet, LOL.
Of course whether it's 18 or 60 years from now, the idea of what a dollar will be worth then is a big scary. For example, $100 today will be the same as $154 in 18 years, or $344 in 60 years.
@89th said in Retirement account for kids?:
Of course whether it's 18 or 60 years from now, the idea of what a dollar will be worth then is a big scary. For example, $100 today will be the same as $154 in 18 years, or $344 in 60 years.
Maybe a few I-bonds?
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I did one through vanguard for my high school best friend’s kid. Transfer wasn’t that bad. Not much worse than any account opening process at a brokerage.
Maybe I just have low expectations
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He has high standards, but wide tolerances.
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He has high standards, but wide tolerances.
@Doctor-Phibes said in Retirement account for kids?:
He has high standards, but wide tolerances.
No need to talk about his former girl friends ...
