Grandma investing for kids

#1

Looking for advice…

My mom has been saving money in savings accounts for a few years now for her 4 grandkids. Now I am helping her move that money over to investments. She decided to invest it in her own Roth IRA and then gift a lump some when it’s time to give it to each child.

I’m wondering the best way to keep the investments separate seeing as its for 4 kids, 2 different families, and all different ages and length of time saving. She saves a set amount each month for each child since that child was born. Just trying to keep it the least confusing and also fair for each child.

Thanks for any help!

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#2

Kind of a pain in the ass to track but she could create a new Roth IRA per each child and name them the beneficiaries.

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#3

I’d check out the investing for kids article!

Investing the money herself and simply gifting them cash is fine, although admittedly it might become a bit of a hairy excel sheet if you’re trying to fairly calculate monthly amounts and growth over time, and not just give them each 25% at some point. The nice thing about Grandma’s Roth IRA is that it grows tax free (and will gift tax free).

With your help you could also set up custodial brokerage accounts for each kid as outlined in the article above. That keeps things kind of neatly in each child’s account and name, but likely has a slightly worse tax treatment. Although I doubt that’s much at smaller amounts.

Finally, a Roth IRA per kid probably won’t work because you need taxable earned income to qualify for contributing to a Roth IRA. And since most kids are lazy bums, they don’t have that. (just kidding about the lazy bums part but the rest is true)

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