IRA for my kid ?

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Toro
Posts: 3
Joined: Fri Oct 18, 2013 10:51 pm

IRA for my kid ?

Post by Toro » Wed Sep 13, 2017 11:24 am

Bogleheads,
I live in NY and own a family business (C-Corp) in NYC for 20 years now. I have a 10 yr old son who I bring to work with me most Sundays and he works a bit for his allowance. I give him $10 and another $10 goes into a savings jar for him. Anyway by the end of the year, he usually has a few hundred in that jar (actually more with birthday gifts, etc) but at least a few hundred from work.
So can I open an IRA account for him ? Or rather is it necessary to add him to payroll for this ? Obviously I don't want to jump through hoops to add him as an employee. That would probably cost me more than I give him.
I'd only contribute about 500/per year for him was my thinking,,,,,,,,, any thoughts ?? Worth it or don't waste my time ?
Last edited by Toro on Wed Sep 13, 2017 12:13 pm, edited 1 time in total.

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Pajamas
Posts: 2780
Joined: Sun Jun 03, 2012 6:32 pm

Re: IRA for my kid ?

Post by Pajamas » Wed Sep 13, 2017 11:44 am

You should be careful with documentation.

I am not familiar with this website but it looks like good advice for this situation and is supported with references:

http://member.taxstrategyletter.com/249

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bottlecap
Posts: 4954
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: IRA for my kid ?

Post by bottlecap » Wed Sep 13, 2017 12:11 pm

I don't recommend bringing this headache for yourself.

This could probably be done, but only to the extent that the child has earned income, and will require research and reporting to produce very little benefit for anyone. It may ratchet up scrutiny on your return every year.

Don't let a saving fetish override practical concerns.

JT

Rupert
Posts: 2661
Joined: Fri Aug 17, 2012 12:01 pm

Re: IRA for my kid ?

Post by Rupert » Wed Sep 13, 2017 12:14 pm

bottlecap wrote:
Wed Sep 13, 2017 12:11 pm

Don't let a saving fetish override practical concerns.

JT
+1. Just open a regular savings or investment account for your kid and postpone the IRA contributions until he has W-2 income.

Toro
Posts: 3
Joined: Fri Oct 18, 2013 10:51 pm

Re: IRA for my kid ?

Post by Toro » Wed Sep 13, 2017 12:18 pm

Being a C-corp seems to make this even more convoluted. All right, it was just a thought. A regular brokerage account then !

FrugalConservative
Posts: 30
Joined: Thu Aug 17, 2017 9:44 am

Re: IRA for my kid ?

Post by FrugalConservative » Wed Sep 13, 2017 12:20 pm

Not worth it.

High Yield savings account is your best bet.

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