Gifts to grandkids

Comments

• Sven

  January 2

  We have had the same question being asked earlier. 529 plan was one of the proposed solution. Please see the thread below.
  mutualfundobserver.com/discuss/discussion/comment/203937/#Comment_203937
• yogibearbull

  January 2 edited January 2

  Sven's link somehow goes back to the OP.
  Here is the URL https://www.mutualfundobserver.com/discuss/discussion/65167/any-suggestions-for-investing-for-a-new-great-granddaughter
• catch22

  January 2

  I suggest you move this to 'Other Investing' for the topic area. You post will have much more exposure.
  
  For the others out on their own..........if they have taxable income; they may establish a Roth IRA. You may contribute to that Roth. This method allows them to maintain their NET income, and yet, start building the Roth investment. We've used this method.
  I fully support the 529 education account, too.
  
  --- Yes, you can contribute to someone else's Roth IRA as a gift, but the account holder must have earned income for that tax year and must not exceed the IRS income limits for contributions.
  
  Key Rules for Gifting Roth IRA Contributions
  Earned Income Requirement: The individual whose Roth IRA you are contributing to (the recipient) must have taxable earned income (such as wages, salary, or self-employment earnings) at least equal to the amount contributed for the year. Non-earned income like gifts, allowances, or investment income does not count.
  Contribution Limits: The total contributions from all sources (you, the recipient, etc.) cannot exceed the IRS annual limit for that person.
  For 2025, the limit is $7,000 for individuals under age 50, and $8,000 if age 50 or older.
  The total contribution also cannot exceed the recipient's total earned income for the year.
  Income Phase-Outs: The recipient's Modified Adjusted Gross Income (MAGI) must be within the IRS limits to be eligible for direct Roth IRA contributions. If their income is too high, they may be ineligible to receive the contribution.
  Gift Tax Exclusion: Your contribution is considered a gift to the account holder. However, the annual gift tax exclusion amount is typically much higher than the IRA contribution limit, so you usually won't need to worry about gift tax implications. For 2025, the annual gift tax exclusion is $19,000 per recipient.
  Special Cases
  Spouses: A spousal IRA allows a working spouse to contribute to a Roth IRA for a non-working spouse, provided they file a joint tax return and their combined income is sufficient to cover the contributions.
  Minors: For a minor child, you can open a custodial Roth IRA where an adult manages the account until the child reaches the age of majority (typically 18 or 21, depending on the state). The minor must still have earned income from a job or self-employment for contributions to be made.
  Adult Children/Parents: You cannot open a Roth IRA for another adult, but you can give them money (via check or electronic transfer) for them to deposit into their existing account.
  Before making a contribution, it's a good idea to confirm the process with the account holder's financial institution, as some may have specific procedures for third-party contributions. You can also consult the IRS website for current rules and limits.
  How To Make an IRA Contribution as a Gift - Investopedia
  Key Takeaways * It is possible to gift a contribution to another person's IRA, but the recipient will remain subject to the earned...
  
  Investopedia
  
  Can Someone Else Contribute to Your Roth IRA? Rules & Limits Explained
  Can Someone Else Contribute to Your Roth IRA? Rules & Limits Explained. ... Did you know someone else can help fund your Roth IRA?
  
  carry.com
  Can You Open a Roth IRA for Someone Else? Here's ... - The Muse
  Can you open a Roth IRA for someone else? You can't directly open a Roth IRA for another adult, such as a partner or sibling, beca...
  
  The Muse
  
  
• Observant1

  January 2 edited January 2

  @racqueteer,
  
  I don't have any specific advice regarding this particular topic.
  As catch22 suggested, you may want to move this thread to "Other Investing" for increased exposure.
• racqueteer

  January 2

  Is there a process for moving a thread, or would I simply create a new instance of it?
• Observant1

  January 2 edited January 2

  @racqueteer,
  
  Go to your first post in this thread and click gear in upper-right corner to Edit.
  The Edit Discussion page will be displayed.
  Click drop-down arrow next to Category and select Other Investing.
  Click Save button.
• Sven

  1:04AM

  @yogibb, thanks for correcting the link. Next time, i will preview the link before posting.