"Robert J. Romano, CPA" <bob[at]romanocpa.com (antispam)> writes:

- quote -

He didn't. He said that once past the age of majority there
would be no *problem* opening an account.

In the past, posters both here and in misc.taxes.moderated have
recounted how some IRA custodians have given them a hard time and/or
refused to open a Roth IRA account for a minor.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Why do you say someone has to be past the age of majority to open a Roth
IRA?
--
Robert J. Romano, CPA
99 Massachusetts Avenue-Suite 4
Arlington, Massachusetts 02474-8600
www.romanocpa.com

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Yes, and that is why it would be a great idea to establish an emergency
fund before you even start investing; just as many advocate doing.

Dan M.

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Good point

But don't many things happen in life that one didn't
even expect?

And therefore maybe wise to have some options with that
money?

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Restrictions should not even be a factor...you do not WANT TO TOUCH THAT
MONEY. The point is that you want to be able to support yourself and not
rely on anyone (including the government) when you get older. Any type of
saving is a great idea, but a tax deferred account that has 25-40 yrs to
grow should be the first thing you contribute to before other investment
options.

Dan M.

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Sometimes I wonder if the above things are still not
better than these new IRA accts.

No restrictions on the money

Ravi Desai <ravster3[at]hotmail.com> writes:
- quote -

more semantics. IRAs are Individual Retirement *Arrangements*
which are composed of one or several IRA *Accounts*.

Unlike "ATM Machine" - which is redundant, "IRA Account" is not.

Nevertheless, IRA as "Account" has come into relatively
common usage and it's often, though *not* always, reasonably
unambiguous when use that way.

See, for example, http://www.ricedelman.com/planning/retirement/ira.asp

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And even then, only a subset of people employed by others.

- quote -

Correct. Though there were things like life insurance and
treasury savings bonds which both have certain preferential
tax treatments. And of course, muni bonds.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

Well, IRAs are Individual Retirement Accounts. They were basically
started to address the needs of self-employed individuals who did not
have access to company pension plans. Only emloyed people had access to
these.
So basically they put/saved/invested their money in stocks, long-term
bonds, property etc., but these were not tax-deductible.

me6[at]privacy.net wrote:
- quote -

- quote -


- quote -

insruarnce and annuities.

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The only tax sheltered plans available were defined benefits retirement plans
which only larger companies could afford and anuities. For individuals, since
(most did not have a business and even if they did could not afford to fund a
defined benefits plan) only real estate, life insurance and annuities were
available that had a tax deferral advantage.

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Yep that's what I meant!

Wow I didn't know churn was a negative term in the
financial industry

Thanks for heads up!

Im curious abt something

When did IRAs first come into existence? What year?

And before that what did people do to save for
retirement purposes?

Did there exist any tax sheltered accounts before the
IRA came along?

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tax sheltered plan, has always been a good idea. And the longer the money is
saved and invested, the better off someone is down the line.

paulmaf[at]aol.com (PaulMaf) writes:
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Just a quick note on terminology.

The word "churn" has specific (and negative) connotations.

In general, it indicates investment turnover - buying and
selling securities, probably excessively.

And in particular, it's used in talking about when folks
have brokerage accounts and let their brokers make buy
and sell decisions for them and the brokers buy and
sell excessively mainly to generate commissions for
themselves.

I'm pretty certain that what you meant by "let it churn --
make money" was more like "let it grow".

Here's an article about some of the negative meaning
of the word "churn" in the investment and brokerage
context:

http://www.stockpatrol.com/buyer/articles/churn.html


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

- quote -

Yep!

I just wish I had someone advising me this when I was 19! lol

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Yes! I have

And that's why Im wanting him to think abt doing this now

Im forwarding all the replies to him so he can read them

If he cant do it now Id at least like to see him do it soon..... year
or two

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Great idea!!

Thanks!

- quote -

Yes!

The magic of compounding

<me6[at]privacy.net> wrote in message
news:gtsgl0988fl9d0unmomj11t0dk8bkc0e8h[at]4ax.com...
- quote -

- quote -

True

But what if he works say just part time? Or very little one year? Or
maybe none at all one year?

Can he still have a ROTH IRA but just not contribute on those years he
made no income?

Bottom line.... I realize the importance of the time component in a
Roth IRA...... i.e. getting started EARLy is paramount.

Hence my curiosity abt him starting one NOW since he is so young at
age 19. With time like that on his side.... 40+ years...... he could
have a good chunk of money even if he cant contribute a lot each year.
See what I mean?

me6[at]privacy.net wrote:
- quote -

ME6-
The rules on Roths focus on contributions, and income during the year of
the contribution (and of course there are rules on distributions at the
end of the pipe). You're able to keep the account in years you don't
qualify for contributions, you just need to qualify to contribute at
some point.

Once he's past the age of majority there shouldn't be any problem
opening an account. He does need to have earned income (salary, wages)
reported on his tax return to make a contribution. It's not necessary
that he's actually saved up the cash for the contribution. He just needs
to have earned income. Meaning, he can earn $4k and spend it all and
still contribute to a Roth, if he gets the cash somehow.

If the job income is at least $3,000 then he can contribute the full
annual contribution limit of $3,000 (this is going up in the future
BTW). If income is lower for the year, then that income figure is the
limit on the contribution - earn $1500 and $1500 is the maximum Roth IRA
contribution for the year.

I often suggest to clients that they use this as a "work incentive" for
children or relatives they want to help out. Like, you or someone could
provide a "Match" to his job income, up to $3k/year, to be used ONLY for
a Roth IRA contribution. The $3k would fall below the annual gift-tax
limit of $11k so it's a great way to transfer wealth while avoiding
taxes. And of course it encourages saving early on which is great too.

These contributions have a huge effect over the long term because they
have so much time to grow. You may have seen the comparisons between the
person contributing the max starting at age 18, and doing it for just 5
years, vs. the 35 year old who does it the rest of their working life.
The 35 year old may never catch up!

-Tad