Brokerage account for Roth IRA with $1,500 contribution?

[Guest moosegirl]

We have a 20 year old who wants to contribute $1,500 to a Roth for 2003. Schwab says they will not open an account with less than $2,000. Any suggestions for institutions that will set up this account?

[ElGuapo]

I'm surprised John G hasn't jumped in here yet. Vanguard is a great place to open an IRA and they will allow you to start with $1,000 in most of their funds. Of course you could only choose one fund, so make sure it's a broad-based choice like the 500 Index Fund, or an asset allocation fund which is even more diversified.

Several other mutual fund companies will let you start small if you sign up for monthly deposits (see TIAA-CREF.org or Fidelity.com, for instance), so you do have some options.

[John G]

Hey mom and dad, how about adding $500 for 2003 or 2004 and you hit the magic 2k for Schwab?

Initial amounts are often less if you sign up for a monthly charge to your checking account. You can also combine 2003 with 2004, or seek an IRA with a firm where you have other business.

M&D - fully funding an IRA is a "heritage" type gift for your kids. You could suggest a matching plan.

The initial dollar amount is rarely a hurdle if you think creatively about solutions.