Minor's investment accounts. Anything to "really" be aware of that could cause problems ???

catch22

Morn'in coffee.....

We've read through the IRS stuff regarding taxation of minor accounts; and have an overall understanding of this area. The minor investment account would not currently be related to any income from the minor; strictly an account holding investment monies.
Is/are there any "little nasties" to be aware of regarding IRS regs/rules or related?
Thank you in advance for your thoughts and wisdom with this area of investing.
Take care,
Catch

LLJB

I'm sure there are plenty of people who can talk better than I can about the details of taxes for these types of things. My experience is that the IRS is relatively straight forward but the States can be quite different depending on how you set up the account. I'd just make sure you pay attention to your State's rules and regs as well so there aren't any surprises there either.

The one thing I've paid most attention to over the years are the gift tax implications. For example, if you contribute to a 529 plan, contribute to an investment account, give your kid's Christmas and birthday presents, it all counts against your annual gift tax exclusion.

catch22

@LLJB
Thank you. Will also look into the state's view on a minor account; with taxation and any variables.

Mark

I don't think there is anything special about these, at least no different than a savings account. I suppose you should be clear about who actually owns the account, you or the child, especially as it relates to withdrawals (when, what for, etc. etc.). Somewhere down the line the child will hopefully make enough income either inside or outside the account to have to file taxes so eventually that will have to be dealt with.

One small item often overlooked - these "savings" accounts have an effect on student loan borrowing, grants, financial aid and so on should the child choose to attend school beyond high school. Just something to be aware of.