|What Can Grandparents Do to Help Their Grandkids Establish Roth IRAs?|
Help establish a 529 College Savings Plan for your grandkid as soon as he or she is born. Since you will pay for this with after-tax money, the account will grow tax free, and can be withdrawn by your grandkid when he or she begins incurring college expenses -- tax free. Unlike a Roth IRA, the kid does not need earned income to set up a 529 Plan, which is why you -- the granparents -- can set it up for your grandkid. But this doesn't teach the grandkid about financial responsibility, compound growth, or provide them the skills to make good investment decisions. That's why Roth IRAs and IRAKids Clubs are important (so please keep reading).
Help your grandkid establish a Roth IRA by doing all the things his or her parents or guardians can do, if they do not have the financial ability, time, or interest in doing so.
Help your grandkids find jobs that will produce earned income. If you live close and need help around your home or business, make meaningful jobs for your grandkid.Do not just give your grandkid a large gift of money. Instead, give him or her jobs so your grandkid can earn enough to max out his or her Roth IRA contribution first -- now $5000 per eyar. If you can afford to give an even larger gift, do it only after your grandkid has earned this initial amount.
Ask your bank, credit union, financial advisor, or accountant to sponsor and help organize an IRAKids Club. If your grandkid lives in a different community not served by your financial service providers, STILL ask your local providers to form IRAKids Clubs for the benefit of local kids.
Help educate your grandkid about saving, investing, making wise choices, and looking ahead. Use yourself as a case study, pointing out where you succeeded or could have done better –especially if you had known then what you are trying to instill in your grandkid today. You speak with credibility, insight and with the best interest of your grandkid. Speak out and encourage your grandkid.
Help your grandkid establish his or her Roth IRA if his or her parent or guardian is not able to do so. You would be custodian of the account until your grandkid turns 18 or 21 (or up to 25), depending on the state. Seek advice from a qualified financial advisor how to handle this most effectively.
Help your grandkid – or seek help for your grandkid – to make wise investment decisions for funds in his/her Roth IRA.
Provide supplemental gifts. For example, give your grandkid on his/her birthday $10 for each year old he/she is. That’s not earned income, but it can be spending money which prevents an equal amount being removed from the kid’s earnings, which can be invested in his/her Roth.
Provide reward and incentives: At the time your grandkid makes his/her annual investment in his/her Roth IRA, match that investment up to a specified number of dollars (say $120) – to be determined by you and your grandkid, as a reward for his or her accomplishment. This is NOT earned income, and cannot be invested in a Roth, but it can be spending money that will help your grandkid prevent spending some of his or her earned income the next year.
Do things with your grandkid that help him/her learn about business. Take him or her on fieldtrips that expand horizons and aspirations. Make financial literacy fun and a priority for your grandkid.
If you find other ways to help and incentivize your grandkid, please let us know what they are. If they are duplicable by other grandparents, we’ll add your suggestion here. And thank you. You – as a grandparent – are a key to helping your grandkid get an early start in earning for, opening, and continuing to invest in a Roth IRA. This is one of the most important ways you can help your grandkid prepare for the future.
| Home |
| Contact | Site Map | Admin |
Site: © 2002-2023 by: Pierian Press Web Services | Hosted by: Stratton House Inn
Content: © 2007-2023 IRAKids.com. All rights reserved.