submitted 1 year ago by root@lemmy.world to c/personalfinance@lemmy.ml

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I've heard this is a good way to set your kid up for success and take advantage of compounding. One of the parts I always get caught up on when looking into it, is that your kid needs some form of taxable income, and whatever they contribute, you can match it.

If you have a child that is just a couple years old, how do you accomplish this? I can't just say I pay her $3000 a year for picking a book to read each night..or can I?

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[-] root@lemmy.world 1 points 1 year ago

Right. I set up one of these when my child was born, but was looking for other options as well. The 529 will probably reach it's peak right before college, where as an IRA will (potentially) grow for another 40 years

[-] dammitBobby@lemm.ee 4 points 1 year ago

A law was recently passed allowing up to 35k from a 529 to be rolled into a Roth IRA in the beneficiary's name, so that could be an option. There are some stipulations but it's better than it going to waste.

this post was submitted on 17 Jul 2023

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