Investing for minors - Custodial IRAs and 529 education plans
THIS IS A WORK IN PROGRESS.
Here's a few definitions you will want to know:
- UGMA/UTMA - Taxable custodial investment accounts for minors. These are not ideal.
- Roth IRA for Kids - A tax advantaged account. This is no different than your adult Roth IRA, but you open it as a custodian until they turn 18/21. Can be used for educational expenses as well as first time home buying expenses without the 10% early withdrawal penalty.
- 529 education plan - A tax advantaged account that can only be used for educational purposes and usually is limited in the funds you can invest in.
- The Benefits of Starting an IRA for your child
- What Are the Rules for a Custodial Roth IRA?
Can Teenagers Invest in Roth IRAs?
- If they have some income, they can—for 50 years of compound interest
- At What Income Does a Minor Have to File an Income Tax Return?
Fund Your Child’s Roth with Chore Income
- A fantastic article with very specific information regarding minors under 14
Where can I open one?
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This site contains accounts of my experiences and opinions, and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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