Earliest age to fund an IRA

Discussion in 'Tax' started by malibu.ron, Dec 12, 2006.

  1. malibu.ron

    malibu.ron Guest

    My grandson is 9 years old and I reward him for his helping
    with my business. He files papers, cleans up, etc. He
    earns around $50 monthly. Can he open an IRA at this early
    age and place some or all of his wages in it.
     
    Last edited by a moderator: Jan 23, 2018
    malibu.ron, Dec 12, 2006
    #1
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  2. malibu.ron

    Phil Marti Guest

    Yes, and it's a great idea since he won't have any income
    tax due on this small amount.
     
    Last edited by a moderator: Jan 23, 2018
    Phil Marti, Dec 14, 2006
    #2
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  3. If you pay him a salary & give him a w2, the kid can put it
    all into ira-up to the max ira contribution limit.

    I think its a great idea.

    ___________________________________
    <<< Benjamin Yazersky, CPA [NJ & NY] >>>
    -----> real address on hobokeni or hobokenx <-----
     
    Last edited by a moderator: Jan 23, 2018
    Benjamin Yazersky CPA, Dec 14, 2006
    #3
  4. Only if he receives a W2 form from you.

    ChEAr$,
    Harlan Lunsford, EA n LA
     
    Last edited by a moderator: Jan 23, 2018
    Harlan Lunsford, Dec 14, 2006
    #4
    Chrisa Anderson likes this.
  5. Yes. If he has earned income, he can fund an IRA, up to the
    amount of his earned income.
     
    Last edited by a moderator: Jan 23, 2018
    Barry Margolin, Dec 14, 2006
    #5
  6. malibu.ron

    Liz Guest

    this is what I did this year. I found out some of the
    following information thru this site. I am a sole
    proprietor, my two 8 year old children are paid $100 each
    per month for helping me in my business. I write a business
    check to them which gets deposited into their savings
    account. From there it gets deducted into their Roth IRA. I
    set it up with Schwab. There was no charge. It is a
    custodial account; the form can easily be download of the
    internet. It took about 10 minutes to fill it out, I also
    arranged that the $100 gets deducted out of their savings
    accounts every month and added to the Roth. You have to do
    W2's and 941's. I called the local tax agencies and they
    assured me that I don't owe any taxes on this, but you still
    have to file the W'2 and the 941. This only works if you are
    not incorporated, otherwise differnet rules apply. One
    gentelman said it would be fine to do one payroll for the
    entire year and file one 941 and mark it as seasonal work.
    It is my understanding that this can be done with children
    as young as 7 years old. The wage has to be resonable and
    should be the same or a little less than what you would pay
    a hired help. By the way, I live in New Mexico, different
    states might have different tax issues. It is never too
    early to start a Roth IRA, I hope my children will realize
    later in life what I did for them and carry on the same
    tradition. The limit for a Roth is $4,000 this year. Hope
    this helps.
     
    Last edited by a moderator: Jan 23, 2018
    Liz, Dec 14, 2006
    #6
  7. Assuming grandson is earning his keep, and is being paid
    what you would pay anyone else to do this job, sure, he can
    open his own IRA -- better make it a Roth -- for his entire
    earnings up to $4000.

    __
    Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
     
    Last edited by a moderator: Jan 23, 2018
    Arthur Kamlet, Dec 14, 2006
    #7
  8. malibu.ron

    Herb Smith Guest

    Yes, assuming you issue him a W-2 form each year AND you can
    find a custodian willing to open the account for him.
     
    Last edited by a moderator: Jan 23, 2018
    Herb Smith, Dec 14, 2006
    #8
  9. But do a Roth IRA and *not* a traditional IRA!
     
    Last edited by a moderator: Jan 23, 2018
    Rich Carreiro, Dec 15, 2006
    #9
  10. malibu.ron

    Ashley K. Knowlton MBA

    Joined:
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    Old thread, but note: I just did my stepdaughter's taxes, she is 20 and a full time student. She had a 1099-MISC job last summer and therefore owed tax. Her father asked me if she could offset it by him starting her an IRA. The answer unfortunately was no...as she is/can be claimed as a dependent (not his) she is not entitled to the deduction/credit for IRA contribution.

    So yes, start the IRA for the tyke...but don't expect any tax benefits (other than any from tax deferral) until he is no longer someone's dependent.
     
    Ashley K. Knowlton MBA, Mar 31, 2016
    #10
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