Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
I used to work for an insurance/financial firm that had a set of mutual funds that I contributed to on a monthly basis for my childs education fund. These funds weren't in any sort of IRA...just straight funds in my name. My child is six years old now and I want to start an Ed IRA for her. Can I transfer the monies from the mutual funds to this Ed IRA? How about a Roth IRA in her name?

Thanks!
Jimsonn
Print the post Back To Top
No. of Recommendations: 0
<<These funds weren't in any sort of IRA...just straight funds in my name. My child is six years old now and I want to start an Ed IRA for her. Can I transfer the monies from the mutual funds to this Ed IRA? How about a Roth IRA in her name? >>

Roth and ED IRAs must be funded with cash so you would have to cash out and pay the taxes before starting the IRAs.

Roth IRAs also must be funded with earned income so it's unlikely you can open one for your daughter.

Jacki
Print the post Back To Top
No. of Recommendations: 0
You can only put in $500 per year into the EdIRA (and no, you can't back-invest the money). You can only put in $2000 per year into the other IRAs, and if the IRA is in your child's name, there must be at least $2000 in earned income.

Eric Morton
Print the post Back To Top
No. of Recommendations: 0
"Can I transfer the monies from the mutual funds to this Ed IRA? How about a Roth IRA in her name?"

As previously mentioned, the shares must be sold before the money can be put into an Ed IRA or Roth IRA. Selling shares will likely create a taxable event. One way to mitigate the tax liability is to transfer all or a portion of the shares to your child and have her sell them. The first $700 of unearned income in her name is tax-free (child under age 14); the second $700 is taxed at her rate (probably 15%). So you could sell off a portion of the account on an annual basis and then invest the proceeds in an Education IRA account. Just keep in mind that assets in a child's name have liabilities when it comes to control at age of majority and in current financial aid formulas.

Print the post Back To Top