26 Sep Can I open Roth IRAs for my adult children?

Q. I have three children aged 35, 30 and 27. All three have good jobs and contribute to their company 401(k)s. Can I open a Roth IRA for each of them and fund it without any tax consequences? I am considering $7,500 for each child. Is that a good idea?
— Dad

A. Opening up a Roth IRA for your kids is an excellent idea.

But you will need to follow the same rules your kids would have to follow as if they were opening the IRAs themselves.

The amount they can contribute for 2023 will be up to $6,500, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

Those over age of 50 can contribute $7,500, he said.

Starting with the 2025 tax year, IRA owners aged 60 to 63 will be eligible to contribute $10,000, he said.

Before you open any accounts and make any contributions, you should ask your kids if they are contributing to an IRA already so you don’t go over the limits, Kiely said.

For a Roth IRA, note that there are income limits. Singles can make a full contribution if they earn up to $138,000 or less, they can make a partial contribution with income between $138,000 and $152,999 and above that, they cannot save to a Roth.

For those who are married, you can make a full contribution if you jointly earn less than $218,000, a partial contribution if you earn up to $227,999 and no contribution can be made for those who earn $228,000 or more.

“If your kids’ income is over the full contribution amounts, you must figure how much you can contribute,” he said, directing you to the contribution limit worksheets in IRS Publication 590.

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This story was originally published on Sept. 26, 2023.

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