IRAs for children

[Shandril]

@glitch99

So I dont want to tie the money up in a IRA or 529 plan,

I thought you could rollover a 529 plan balance up to $35k to a Roth IRA for the beneficiary. That may be easier than the lemonade stand scheme. There are some caveats like the 529 plan has to be opened for 15 years and leftover balance (including earnings) has to be in the 529 plan for at least 5 years. So it may not be useful if kid did not have a 529 plan already.

In a Roth IRA, kid can always withdraw the contributions at any point without tax or penalty.

[glitch99]

@Shandril

There are some caveats like the 529 plan has to be opened for 15 years and leftover balance (including earnings) has to be in the 529 plan for at least 5 years. So it may not be useful if kid did not have a 529 plan already.

It’s still useful, there are no age limits. If you start the account late, you just need to wait until you’re older to covert/rollover.

We could all benefit being a 529 beneficiary, as a backdoor way to stuff more into a Roth. But the 5/15 year timeframe before converting risks the balance growing beyond the $35k limit.

For my purposes, it isnt an either/or proposition. Each option is a separate bucket.