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<My grandfather has a spouse and my mom is married, so I assume that as long as the amount is $40,000 or less (and that everyone files the correct paperwork), my grandfather is safe from incurring a gift tax.>

Not necessarily. Do not make an oversimplified assumption. The only way the 40k will not cause a problem is if your grandfather and his spouse EACH give your mom 10k. Then they would EACH have to give 10k to your mom's spouse. One of the pros on the board can guide you on the best way to accomplish that. IMO the best way to do what they desire to do is to write 4 different checks for 10k each. If your grandfather writes out one check for 40k he would have to file a gift tax return.

As for the uses of the money, you have to have EARNED income in order to open an IRA. Plus there are a number of other qualifications. Besides you are only talking about 2k anyway. The only other advice I can give is stay away from annuities or anything else that someone may try to sell her. Read as much as you can on the FOOL. She has to determine what level of risk she is comfortable with. Good luck!

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