Stupid money question....IRA

[Joel/ak]

We moved from AK to MI in 2013. My old employer rolled my 401k into an IRA through merril.

I just found the paperwork tonight from merril about the transfer. I still have totes from our move that I haven't touched...I found my original DD214 last year from my discharge 24 years ago...I suck

Anyways my question is how hard would it be to put this IRA in my daughters name as the sole owner? She's 13 so hopefully it will grow. We will be OK so I want to gift her a start

I don't know the dollar value, guy on the phone couldn't tell me details because it's been so long so gotta go in person next week to a local office. No big deal.

Is something like this doable?

 

[Tpondel]

No. The I means individual. It's yours.
you can leave it to your daughter but not change ownership.

 

[riptides]

No. The I means individual. It's yours.
you can leave it to your daughter but not change ownership.

Time for an estate or beneficiary.

 

[Joel/ak]

I'll just make her the primary.

 

[Roadworthy]

You should be aware that when you reach a certain age (72 or 73) you must take money from the IRA each year so the government can tax it. There are calculations for this minimum required distribution. When the IRA becomes your daughter's the distributions must continue based upon what your age would have been not hers.

 

[Joel/ak]

I'm only 51 so I got time. I'll just make her the primary beneficiary. If I die, then I don't care what she does with it.

 

[duffer]

Currently under the tax law passed in 2020, a non-spouse beneficiary has to distribute the entire balance of an IRA by the end of year 10, after death of owner. They can do it all at once, or any piece meal way they want (RMD's are the minimum distribution if already started for each year).

 

[zzvyb6]

Create a Revocable Living Trust. This is a You even after you pass. In it, you name all the actions an administrator will take to fulfill your wishes for all you investments, properties, pets, and relatives. It keeps you out of probate court, which in some states means they take 1/2. Revocable means you can change it whenever you want to and alter amounts, people, charities, relatives, and change of mind. I had a lawyer prepare it and he will administer.

 

[MoKelly]

Create a Revocable Living Trust. This is a You even after you pass. In it, you name all the actions an administrator will take to fulfill your wishes for all you investments, properties, pets, and relatives. It keeps you out of probate court, which in some states means they take 1/2. Revocable means you can change it whenever you want to and alter amounts, people, charities, relatives, and change of mind. I had a lawyer prepare it and he will administer.

What state takes 1/2 in probate?

 

[CliffordK]

Read about 529 investment plans for your kids.

I believe largely like a Roth IRA with post tax money invested, then later tax free for paying education expenses. If the kid doesn't go to college, there are ways they can still use the money.

As far as 401K vs IRA, they are largely similar, but one can take loans out of a 401K, while one can not take a loan against an IRA. Thus, there are benefits of rolling a 401K plan from one company to the next.

 

[Joel/ak]

Read about 529 investment plans for your kids.

I believe largely like a Roth IRA with post tax money invested, then later tax free for paying education expenses. If the kid doesn't go to college, there are ways they can still use the money.

As far as 401K vs IRA, they are largely similar, but one can take loans out of a 401K, while one can not take a loan against an IRA. Thus, there are benefits of rolling a 401K plan from one company to the next.

We got her a 529 when she was 2. At the time we paid 5k for it, nowadays the overall investment might buy a book or 2 but it's better than nothing I guess.

 

[ericm979]

If the 401k is still adminstered by a former employer or the company they hire to do that, it's often worth while to move it to an account that you control. Company adminstered 401ks often have additional fees an account with an investment company doesn't have. Sometimes those fees are in the 1% of total investments range, which is a big hit to the growth of your money. And often the investments are limited as well.

I always roll over my 401ks when I leave an employer. They go into an account that only has tax deferred money in it so as to not create a tax mess.

You can do this independently of naming a beneficiary or creating a trust. I think the trust is a better idea. You should probably talk to a professional about your goals in order to get a result that best matches them.

 

[MossRoad]

We got her a 529 when she was 2. At the time we paid 5k for it, nowadays the overall investment might buy a book or 2 but it's better than nothing I guess.

We put $25 per paycheck in our kids' 529 plans. They each had about $18K when they started college. By the time they finished their 4 years, that was 2 years of tuition to Purdue for each of them.

 

[dodge man]

You are allowed to gift your children so much per year. I think it $17k. The problem is you’d probably have an ugly tax bill and possible penalty doing that from a 401k. Like already said, a beneficiary is the best way.

 

[dmccarty]

You might want to consider converting the IRA to a ROTH IRA. There will be tax hit now, but the money will grow and be tax free when your daughter inherits the money. The RMD(Required Minimum Distributions) will likely cause tax issues in the future for a regular IRA/401K.