Custodial IRA Contributions
It seems to be commonly accepted that cash in a UTMA account can be transferred directly to a custodial 529 account for the same beneficiary. Under similar reasoning, shouldn’t a custodian be able to move cash directly from a UTMA account to a custodial Roth IRA account for the minor who has earned income? Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2016-08-04 00:36
Yes. Since an IRA contribution would not be considered basic support, funds distributed from the UTMA account could be used to fund an IRA contribution for the minor given sufficient earned income for the minor. Certain UTMA assets sold to raise cash could trigger taxable income and the distribution and the IRA contribution are separate transactions. All IRA contributions must be in cash.