Ask Terry Questions Custodial IRA or what?

Custodial IRA or what?

By Terry Savage on March 26, 2024 |

Hi Terry,

We fall in the higher tax bracket and live in CA. I was wondering what I can do for my 12 and 14-year-olds. And where to invest say 100K for 1-2 years. I want low-risk options other than CDs and Tbills. I have some amount in there in TBills and CDs.


Terry Says

Well, your kids CANT have an IRA, since they don’t have “earned income.”
But you could open a 529 college savings account, and deposit 5 years of the allowable $18,000 annual gift, or a total of $90,000 for each child into separate accounts. And your spouse could also bunch a gift of $90,000 for each child.

Money in a 529 College Savings Plan grows tax free until it is used for college. You have a choice of investments within the plan.
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