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Roth IRA for my daughter?

ponyo

ponyo

Lifer
I would like to set up a Roth IRA for my 3 year old daughter. The problem is that she doesn't earn any income. Is there a way for me to employ her in my business as say a model and pay her $4000 as her income so I can open one up for her?

Anyone know a legit way to get around the income rule?
 
Originally posted by: Naustica
I would like to set up a Roth IRA for my 3 year old daughter. The problem is that she doesn't earn any income. Is there a way for me to employ her in my business as say a model and pay her $4000 as her income so I can open one up for her?

Anyone know a legit way to get around the income rule?
Click to expand...

Heh, you'd be opening a whole can of worms doing something like that.
 
You would have to ask Mr. Roth if he's ok with this. If yes, he will yell, "Shazaaam!!!", and she will have an IRA.
 
There are college tuition savings programs in many states that are legal, while what you're thinking of has "massive IRS penalties" written all over it 🙁
 
You can pay your kids a reasonable amount for doing things like house chores and put that into a roth ira. If you can prove that she's generating income for your business then I think you could do that, but you should consult with your tax adviser.
 
i would wait until the child is 16 so as to avoid all legal reprocussions. utilize aforementioned college savings programs until then.
 
Originally posted by: DaveSimmons
There are college tuition savings programs in many states that are legal, while what you're thinking of has "massive IRS penalties" written all over it 🙁
Click to expand...

She already has her college tuition pretty much paid for. My wife and I have bought her stocks since she was born. Every year we buy $5000 worth of stock in one company for her. She already owns Altria, Costco, and now Pfizer. We plan on adding for two more years and then just letting it grow on its own.

Now we want to secure her retirement before she's 18 but that income requirement for Roth is in the way. There has be a legal loophole around this.
 
Originally posted by: Naustica
Originally posted by: DaveSimmons
There are college tuition savings programs in many states that are legal, while what you're thinking of has "massive IRS penalties" written all over it 🙁
Click to expand...

She already has her college tuition pretty much paid for. My wife and I have bought her stocks since she was born. Every year we buy $5000 worth of stock in one company for her. She already owns Altria, Costco, and now Pfizer. We plan on adding for two more years and then just letting it grow on its own.

Now we want to secure her retirement before she's 18 but that income requirement for Roth is in the way. There has be a legal loophole around this.
Click to expand...

and why not open a 529 for college and use the stocks as a placeholder until she's eligible for a roth??
 
Hmm, maybe you can do a traditional IRA even though it won't be deductible? (No idea, wild guess)

At least it grows tax-sheltered if not tax-free, and she can't touch it until retirement.


> and why not open a 529 for college and use the stocks as a placeholder until she's eligible for a roth??

Yep, the main drawback with these is she'll eventually start owing every year for the dividend income.
 
Originally posted by: Naustica
Originally posted by: DaveSimmons
There are college tuition savings programs in many states that are legal, while what you're thinking of has "massive IRS penalties" written all over it 🙁
Click to expand...

She already has her college tuition pretty much paid for. My wife and I have bought her stocks since she was born. Every year we buy $5000 worth of stock in one company for her. She already owns Altria, Costco, and now Pfizer. We plan on adding for two more years and then just letting it grow on its own.

Now we want to secure her retirement before she's 18 but that income requirement for Roth is in the way. There has be a legal loophole around this.
Click to expand...

I doubt you've got college covered with $25k. You've got to beat inflation, beat the rising college costs (which have been rising quicker than inflation), and, based on that amount, beat it by a large amount unless she's going to a really cheap school.
 
Originally posted by: Whoozyerdaddy
Here's a wild idea... how about consulting with a financial pro? This would be a no-brainer for my Dean Witter guy.
Click to expand...

Winner. Financial professionals live for finding tax loopholes and this kind of stuff.
 
Originally posted by: Naustica
Originally posted by: DaveSimmons
There are college tuition savings programs in many states that are legal, while what you're thinking of has "massive IRS penalties" written all over it 🙁
Click to expand...

She already has her college tuition pretty much paid for. My wife and I have bought her stocks since she was born. Every year we buy $5000 worth of stock in one company for her. She already owns Altria, Costco, and now Pfizer. We plan on adding for two more years and then just letting it grow on its own.

Now we want to secure her retirement before she's 18 but that income requirement for Roth is in the way. There has be a legal loophole around this.
Click to expand...

That's one lucky little girl.

As others have said, you need to talk to a financial advisor.
 
Give her a gift of up to the $12,000 annual exclusion amount (unless you want to use up some of your lifetime gift/estate credit). Give her some form of property/stock/whatever, that is eligable for capital gains treatment when sold. That'll do as a "placeholder" until she's eligible to start a Roth account and will give her a more favorable treatment to taxes when she does sell the property.
 
I would wait till she has the ability to sign her name

I was listed as a joint on many assets at 10 years old.
 
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