RichArt25 wrote:I am concerned about my parents' retirement plans and am looking for ways to help them. My father, age 50, has a traditional pension plan through his company and has worked there for 12 years. My mother, age 47, has been self-employed all her life and does not have a retirement plan established. Both plan to work for at least 15 more years. Neither has significant savings to start individual retirement plans for themselves.
I am in a very good position to help my parents set up accounts for their retirement. The primary option I am considering is to help them create ROTH IRAs for themselves and then to gift them money to place in the accounts. Based on current 2013 IRA contribution limits ($5500-$6500), the money I would give them for the IRAs in 2013 would not exceed the gift tax limit ($14000/person), so I avoid any penalties. I plan on contributing to their accounts until their retirement.
My questions are:
1) Is creating an IRA for each parent the best method to help them grow retirement funds on a relatively short timeframe? What other retirement plan options are available that I might have overlooked?
2) For IRAs, could I also contribute 2012 funds (in addition to 2013 funds) since neither they nor I have filed taxes for 2012 yet?
3) Would there be any tax or contribution conflicts/benefits with my father having a company pension plan and a separate IRA?
4) Am I overlooking any tax penalties/benefits for myself in regards to contributing to IRAs for my parents?
I agree with Default User that there isn't enough information. The main question is do your parents earn enough to fund their own retirement, and if so, why aren't they? Actually, my response doesn't depend on their ability, I would not recommend investing any money in their names. If you want to save for their later years, use your own accounts and provide income when it's needed.