Afford Anything Q&A: Can You Open an IRA for Someone Else's Kid? (And Should You?)
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Aug 26, 2025 Explore the challenges of setting up investment accounts for kids, like IRAs and 529 plans, while navigating the complexities of family finances. Discover if TIPS are necessary for inflation protection or if other investments are sufficient. Learn about switching from Roth to Traditional 401(k) contributions and the tax implications of moving to a tax-friendly state in retirement. Gain insights on prioritizing practical financial decisions over optimization and the importance of teaching kids financial literacy.
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Trips Build Stronger Bonds
- Joe Saul-Sehy takes nieces and nephews on a big trip when they turn 10 to build a relationship.
- He gives regular gifts to a niece he sees frequently and maintains connection that way.
Use A 529 Not An IRA For Most Kids
- Open a 529 for a niece or nephew and name them beneficiary if parents permit or contribute to an existing 529.
- Do not open an IRA for an unearned child because IRA contributions require earned income.
Contribute To Existing 529s
- You can contribute to someone else's 529 even if the parents already opened one; multiple people may add funds.
- Open a separate 529 only if you want distinct ownership or different plan features.
