annuity for a child
I have an annuity for an 11 year old. It is in her name and I am the custodian. I tried to open a Roth IRA for her but the mutual fund companies said it would be difficult because she has no earned income and there is no employer number. I was trying to start at $50 a month for her for doing the dishes, ect but they did not buy it. My accountant says the same, do not do it. The annuity is a varable and is with a no load muual fund company they allows me literally over a hundred investment options such as REIT, foreign funds, mid cap, ect. This money is SOLELY for her retirement as I have other ways to finance her education, car, and house. Am I doing the best thing possible?
Permalink Submitted by Alan Spross on Mon, 2010-08-09 01:05
Earned income for a child can properly fund a Roth IRA contribution, but records need to be kept and the hourly rate paid for household errands must be reasonable. The IRS has not been targeting child IRA eligibility, but IRA custodians differ in their internal requirements for accepting contributions for minors, especially when there is no W-2. If you keep checking out different custodians you will probably be able to find one to accept the contributions. Chances get better as the child ages.
You probably have checked into 529 plans and Coverdell ESA with respect to the education funding.
Permalink Submitted by rod ramos on Mon, 2010-08-09 05:05
Thanks Alan I do have the 529 and cloverdale.
I hope you does some sort of part time job at 16 or so and I would match all her earned income and place it in a Roth but I hate to lose five years of growing the Roth from 11 to 16 even if it was a relatively small contribution.