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OfflineManianFHS
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Opening a ROTH IRA for my kiddo
    #27598129 - 12/29/21 12:14 AM (2 years, 30 days ago)

Not sure if anyone here is doing that. Shes only 5, and were just throwing all the birthday money/piggie bank money into a ROTH for her rather than let it sit and lose value. The plan is to contribute under $1100 a year to avoid tax hassles. We also have a 529 going for her, which I will be moving into SPY in the coming weeks, which is more of a college fund. The Roth I just want to set up to help grow and give her a head start, as well as prep her for saving on her own when the time comes.

Just wondering if anyone has any tips/pointers for this if they have done it for their kids. I am using TD Ameritrade, that's where my accounts are.


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notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

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OnlinegeokillsA
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Re: Opening a ROTH IRA for my kiddo [Re: ManianFH] * 1
    #27598573 - 12/29/21 12:12 PM (2 years, 29 days ago)

An interesting idea, however to be technically legal, the child must have earned income, which, if it is above $1100, would generally require you to file a tax return in their name, even if they remain a minor dependent on your own tax return.  Additionally, you can only legally contribute up to the child's total annual earned income into the Roth IRA in any given year.  Further complicating matters is the self employment tax, which is required to be paid on self-employed earnings over $400 (think babysitting, dog walking, taking out the trash, etc).  So, theoretically, you could contribute $399 each year to a ROTH IRA for your kid, without having to fuss with additional filing complications.

Reference:


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OfflineManianFHS
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Re: Opening a ROTH IRA for my kiddo [Re: geokills]
    #27599338 - 12/29/21 11:59 PM (2 years, 29 days ago)

Thanks for the response Geo! That is good information. I have also read that it is wise to keep a spreadsheet of earned income for the minor (for doing house chores, etc.). Nothing complex but in case of an audit or such there is some documentation. Sub $400 is adequate and likely appropriate to what she receives in cash gifts, - none of which she has a need for anytime soon.

I had to print out the forms and sign/send them in, as is a requirement with TD Ameritrade for Minor ROTH IRA accounts. Will let you know how it turns out :smile:


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notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

ChrisWho said: "It's all about the journey, not the destination."


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OfflineBrian Jones
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Re: Opening a ROTH IRA for my kiddo [Re: ManianFH]
    #27601474 - 12/31/21 05:47 PM (2 years, 27 days ago)

I think with a long time frame like your daughter an index fund or related ETF would be a good choice. TD Ameritrade merged with Charles Schwab so they have super low expense index funds. However they may have minimum investments of around 3K. You could open one with Fidelity which has zero expense index funds and no minimums, and than tranfer it to Ameritrade when it reaches 3K.


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OfflineManianFHS
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Re: Opening a ROTH IRA for my kiddo [Re: Brian Jones]
    #27604556 - 01/02/22 10:43 PM (2 years, 25 days ago)

Oh for sure. I have already submitted the paperwork and they are working on setting up the account, its a bonafide ROTH IRA, with broad market access. The only difference is I will be the custodian until she is 21. She had ~$276 in her piggy bank. Will throw another hundred at it for the 2021 year, and another amount of a similar size in a few months for 2022.


--------------------
notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

ChrisWho said: "It's all about the journey, not the destination."


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OfflineManianFHS
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Re: Opening a ROTH IRA for my kiddo [Re: ManianFH]
    #27609817 - 01/06/22 10:52 PM (2 years, 21 days ago)

Application accepted and her ROTH linked to my accounts. It was easier than I thought.

Sending a check in the mail for $377 tomorrow, payment for her assistance in home science experiments. Playing it safe that $377 and a similar rate of contributions over the next 12 years will equal close to $10,000, good head start in retirement I suppose, assuming she keeps it in there for an additional 40 years..


--------------------
notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

ChrisWho said: "It's all about the journey, not the destination."


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OfflineSugabearcrisp
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Re: Opening a ROTH IRA for my kiddo [Re: ManianFH]
    #27619658 - 01/15/22 10:05 AM (2 years, 13 days ago)

We did this for out daughter. We basically matched her income from part time jobs into the account for a few years and have just let it grow.

P.s. we also opened roth's for ourselves and put a chunk in with the theory that today's tax rate will be lower than it is when we retire.


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OfflineManianFHS
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Re: Opening a ROTH IRA for my kiddo [Re: Sugabearcrisp]
    #27619788 - 01/15/22 12:32 PM (2 years, 12 days ago)

Nice, yeah same here. Both my wife and I have Roth IRAs - I actively contribute to mine each year, in addition to our 401ks. Just chunking money away everywhere we can.

Just checked my daughters account, money is in there, so will be putting it to work come Monday.


--------------------
notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

ChrisWho said: "It's all about the journey, not the destination."


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