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Subject:  Re: Roth IRA Limitations Date:  11/29/1999  9:48 AM
Author:  TMFPixy Number:  15735 of 88758

Greetings, Jerabek, and welcome. You asked:

<<I have exceeded the AGI limit for an Education IRA for my daughter. Right now, I am the contributor of this account. Can I re-characterize this account like I'm gonna do for my Roth IRA to a Traditional IRA?>>

No, you may not. The excess contribution should be removed along with all earnings prior to the filing of your income tax return for the year to avoid the 6% penalty. The earnings must be declared as income to the child and are subject to income tax and penalty for early withdrawal. See pages 45 and 46 of IRS Publication 590 (Individual Retirement Arrangements) for details. You may get that pub at

<<In the All About IRA's personal finance, there's an example of Grandpa giving a $500 gift to his grandson & then his grandson is the contributor. Can I do the same thing as the father?>>

If you gift money to the child, there's no reason the child can't use it to open the EIRA. Earned income is not an issue here, only having the money to make the contribution. However, IMHO you should ask this question on the Tax Strategies board for a reaction. I personally wonder if the IRS would consider this a bogus gift made soley to avoid the AGI limit on your making a contribution yourself. Still, I see nothing to preclude such a gift followed by a contribution made by the recipient.

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