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Subject:  Want to give sister retirement and/or down pmnt Date:  5/24/2004  1:38 AM
Author:  sprexumn Number:  71938 of 123143

Here's my situation, and I appreciate any advice.

I am in a place where I'd like to give my sister $20k, and make sure it goes to a good use. After floating lots of ideas with her, the idea that we agreed on would be for me to use the money to help her fund an IRA, that she could withdraw for a downpayment on a first time home if that made sense, or keep for retirement otherwise. One main reason for the IRA rather than just giving the money straight out is to keep it the money from being a temptation. We don't want it to get used for day to day bills or debts or vacations or whatever.

Only now that I start looking at putting this into action, I'm realizing there are some problems with this plan:

1. The minimum she can contribute is a few thousand per year (increasing over time, but still nowhere near $20k). There's no way to get the whole $20k in at once.

2. She's getting married in a couple of months, and I would like to get this money transferred to her in some form before then so that just on the outside chance it ends in a divorce it will be considered hers rather than community property.

3. There's the $11k gift tax limitation... if I gift all $20k at once that'll cause unnecessary taxes. I think that in itself could be worked around by gifting say $9k to my parents and then them gifting it to my sister.

4. She has to have income equal to the amount contributed to the IRA. She has worked in the past but is now working for her fiance and I'm not sure exactly how it's all getting reported. I don't think this is an issu