Child trust – Roth IRA contribution
I have a child who now has earned income. The kid received an inheritance 20 years ago that has been held in trust. Each year, my wife and I have paid the taxes on the earnings of this account. Can she now move $6,000 a year from the trust to her Roth? She has sufficient earned income and is not contributing to any other 401k / IRA. I don’t see there being any tax consequences on such transfers as all of the earnings in the trust have been taxed.
Permalink Submitted by Alan - IRA critic on Fri, 2021-11-26 16:58
As long as the child has earned income (should not be from doing household chores), the Roth contribution can be made. If a distribution can legally be made from the trust, that could be used to subsidize the Roth contribution.