The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/i-agree-that-the-irs-is-not-going-to-track-down-a-11133470.aspx

Subject:  Re: IRA for 13 yr. old Date:  8/9/1999  2:25 PM
Author:  zorloc Number:  13005 of 76080

I agree that the IRS is not going to track down a minor being paid and try to collect, unless some benefit is attempted.

If you want to setup an IRA, you would have to report the self-employment income, which if the amount is over $400 would make you suseptable to the Self-Employment taxe (15.3%). Unless there is an exception for young children (so you don't have to pay the SE tax), this would be a horrid deal for you. First, you are losing 15.3% of your principal. Second, you will not derrive any benefit from paying Social Security or Medicare, since they only counts years/earnings after you are 22 or 23.

It seems to me that the better investment would be to set up a taxable custodial account, which most major financial houses will do (Vanguard, T.Rowe Price, etc.).

jbw
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us