cancel
Showing results for 
Search instead for 
Did you mean: 

Tax advantaged retirement account for a baby?

iced
Valued Contributor

Re: Tax advantaged retirement account for a baby?

One word of caution on the UGMA/UTMA path, should you go down it: if the goal is to avoid tax complications, these aren't what you want.

 

Minors who have unearned income have a very different set of tax rules apply to them, and they go from the 0% to same-as-you bracket fast. Hit $2201 in unearned income and you're looking at tax liability.

 

I did a UTMA for my child at birth and now that child has had to file a 1040 every year they've been alive (and has owed taxes every year). It's fine for me, but if tax simplicity is your goal, these probably aren't for you.

Message 11 of 11
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.