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Yes, opening an IRA for a minor is tricky, especially at a discount broker. While legal, many just won't touch it.

What you do is get an account application from Waterhouse, and have your minor child fill it all out in his/her name, SS no., birthdate, etc. Then send it in along with the amount of the opening deposit. [Brokerages rarely turn down real money, even if below account minimums, etc. ] Have them dump it in the money-market "sweep" fund.

So far, everything is OK, legal, and above board. Even though the minor cannot own securities in his/her name, all we have now is a money-market account in Waterhouse Bank.

Now, Waterhouse Bank is the custodian of the funds for the minor, so securities can be held. but, the minor can't do any trading ...

So, once the account is completely opened and you have the account numbers, personal broker, etc., THEN fill out the trading authorization/limited power of attorney form to allow one or both parents to select investment vehicles for the child. This will probably be only for a couple of years, and an allocation or two a year anyway. Most kids are in their teens before they have earned income, and will then turn 18 in a very few years.

If you try to combine the steps above by having the parent open the account in person with immediate trading authority, you will probably be rejected. Been there, done that. So have a few others that I have been in contact with.

I selected Waterhouse--would accept minor accounts, no annual account fee, very reasonable transaction fees, and a large list of no-transaction-fee mutual funds. In addition, they offer the whole spectrum of investment choices, including bonds, mutual funds, stocks, options, and a daily-sweep money-market account.

Great idea--get your kid to save early & save often, & they won't have to save a lot.
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