Your Survival Guy

Preparing your investments and family for when disaster strikes.

Disclosure

  • Home
  • Your Survival
    • EMP Threat
    • Tucker Explains
    • Newport Gas Outage
    • Water
      • Emergency Water Storage
      • Let There Be Water
    • Get Your Gun and Your Training Now
    • Satellite Phones
    • Navy SEAL Survival Kit
  • Your Money
    • Coronavirus Infects Stock Market
    • Looking for a Better America
    • You Invest, They Win
    • Where to Keep Your Cash
    • Paris
    • How to Buy a Boat
    • Dead or Alive? The Future of Long-Term Investing
    • Is Vanguard too Big?
    • Cryptocosm and Life After Google
    • The Last Intelligence Report
    • The Truth Behind the S&P 500
    • RAGE Gauge
    • How Many “Retirees” Will Keep Working?
    • Your Retirement Life
    • You’ll Love This if You’re Dreaming of an Active Retirement Life
  • Weapons
    • Self Defense
    • Every Family Should Own at Least One Shotgun: Here Are Three
  • About Me
    • Preparing for Times Like These
    • My Videos/Pics
    • Music
      • RIP Neil Peart: You Will Always Be Remembered as a “Modern-Day Warrior”
  • You
    • Our Cabin on Kodiak, Alaska
    • If You Are in Pain, this May Help. It Helped Me.
    • How to Save for a Grandchild
    • FIRE! Financial Independence, Retire Early
    • Compound Interest
    • Arithmetic of Portfolio Losses
    • Maximum Portfolio Withdrawal Rate
    • An Efficient Frontier
    • Retirement Compounders
    • Counterbalanced Total Returns
  • Survive & Thrive
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • Welcome

A Tax-Free Savings Plan for Your Grandchild

December 6, 2019 By E.J. Smith - Your Survival Guy

By Motortion Films @ Shutterstock.com

Pay attention here. When you beat inertia and get on the track to retirement savings, a lot of opportunities tend to come your way.

One of those opportunities is having time to focus on other members of your family.

When it comes to investing, you and I know the most powerful tool to wealth is compound interest. But it requires time—a commodity in abundance when you’re young—and money. That’s where you come in (sorry).

You know the path to my rich grandchild, poor grandchild. You have the knowledge and the money (you don’t need a truck load) to teach them in real dollars about compound interest.

I’ll never forget a conversation I had not too long ago with a mid-sixties millionaire (a client). He said he had his grandparents to thank for all of this money because they got him started at a real young age. He never touched it (that’s not easy by the way) and today it supplements his Retirement Life.

OK, once you get your grandchild on the investment track, doors will begin to open up for everyone involved.

Baby Steps: A UTMA or UGMA

First you get them started with baby steps with a UTMA or UGMA account at Fidelity.

Then when they’re old enough to work, open a Fidelity Roth IRA for kids or a Kiddie Roth IRA.

Kiddie Roth IRA

I love Kiddie Roths because you can be creative here in so many ways.

For example, if your grandchild earns money scooping ice cream, cutting lawns, and/or busing tables, she can contribute her earnings to a “kiddie” Roth IRA up to her earnings level.

If she earns $1,000 that’s the max she can contribute (the annual max contribution for 2019 is $6,000).

Here’s what I like about this. You can help her with the contribution. The IRS doesn’t care where the money comes from as long as it doesn’t exceed her cap.

For example, you and she can agree to match her earnings or half her earnings (you decide) to contribute to her Kiddie Roth. If it’s a 100% match you agree to, then you put $1,000 into the Kiddie Roth. She doesn’t have to contribute anything if she wants to use her summer money for her own spending. That’s her choice.

Here’s more about a Kiddie IRA from Fidelity:

Fidelity Roth IRA for Kids

Help a child invest for the future. This account can be opened and managed by any adult—parent, grandparent, aunt, uncle, family friend—on behalf of a minor earning income.

Open a Roth IRA for Kids

Tax advantages

Earnings Earnings grow federally tax-free.1
Withdrawals Withdrawals are tax-free.1

Account features

Eligibility Minors must be under the age of 18.

Minors must have employment compensation.2

Qualifying income can come from a job and/or self-employment such as babysitting, mowing lawns, or shoveling snow.

Account management The adult maintains control of the account and is the sole recipient of account statements and communication.

The account must be invested for the benefit of the minor and all account assets must be transferred when the minor reaches the required age (varies by state).

Maximum contributions IRA contributions cannot exceed a minor’s earnings, e.g., if a minor earns $1,000, then only $1,000 can be contributed to the account.

There’s an annual maximum contribution of $6,000 per child, per year for 2019 and 2020.

Minimum investment There is no minimum to open the account.

Certain investments, like mutual funds, require a minimum initial investment.

Investment options Access a wide range of investments offering growth or income including mutual funds, stocks, bonds, ETFs, and FDIC-insured CDs.
Support and guidance Our online courses make it easy for minors to learn the basics of investing.

Get insights on the markets with Fidelity Viewpoints®.

Test investing ideas or discover new ones with our powerful research and screening tools.

Fees

Account fees There is no opening cost, closing cost or annual fee for Fidelity’s Traditional, Roth, SEP, SIMPLE, and rollover IRAs.*
Trading fees3 $0 commission for online US stock, ETF, and option trades.

Read more from Fidelity here.

The following two tabs change content below.
  • Bio
  • Latest Posts
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

  • Welcome to the Interest Rate Prediction Business, JACK! - February 26, 2021
  • Petrified Snow/Ice Fishing? How about a Boat? and More - February 25, 2021
  • COVID Chaos: New York and California vs. Florida and South Dakota - February 24, 2021
  • How One Man and His Family Survived the Texas Deep Freeze - February 24, 2021
  • UPDATE: Your Gun Rights and Freedom Are Under Assault - February 22, 2021

If you enjoyed this post, email it to a friend:

  • Email
  • Print
  • Facebook
  • LinkedIn
  • Twitter
  • WhatsApp

Related Posts

Trending

  • Permitless Carry Corridor Expands: Red States Trouncing Blue States on Freedom
  • Welcome to the Interest Rate Prediction Business, JACK!
  • Long Live Rush Limbaugh: Our Walk in the Woods
  • America’s Growth Corridors as Written in 2013 by Joel Kotkin
  • How One Man and His Family Survived the Texas Deep Freeze
  • New Assault Helicopter Design to Revolutionize U.S. Army Capabilities
  • Your Retirement Life: Meet Larry the Car Wash Guy
  • Deep Survival, Who Lives, Who Dies, and Why
  • COVID Chaos: New York and California vs. Florida and South Dakota
  • You’re Worried About Money, Not Just Losing It

YOUR SURVIVAL GUY MUST READS

  • Tucker Explains: Chinese Intel Op Targeted Democratic Politicians Including Eric Swalwell
  • FedEx Driver Shot in the Neck: Defund Police?
  • Even Elon Musk, Tech Billionaire, is Looking for a Better America
  • Once Desolate Country Towns Now Overrun by People Trying to Escape the City
  • Your Survival Guy’s Saturday Lunch Surprise You Won’t Believe
  • Sheep Get Killed: How to Be a Wolf
  • You Know “We’ve Been Lied To” and They Laugh at Us
  • Every Family Should Own at Least One Shotgun: Here Are Three
  • Stimulus Rewards States That Have Abused Their Businesses the Most
  • After Democrats Encourage Riots, Biden Wants to Take Away Citizens’ Guns
Only if You’re Serious
50 + Years
Only if You’re Serious
Only if You’re Serious
Only if You’re Serious
Only if You’re Serious
Escape the City
Smith Family Robinson
The Best States for Survival
Only if You’re Serious
Why Vanguard is Too Big for YOU
See Who's Missing the Boat
You Invest, They Win
Emergency Water Storage
Emergency Water Storage
Emergency Water Storage
Why Fidelity is Number One

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.