can I open accounts in my kid's names?

[Guest kevin w]

Can I open ac****s for each of my three children and put the maximum in? If allowed, I would expect to lose control over them legally, but do it have to give notice to my children that they exist?

[Guest swilsonw]

A Roth or Traditional IRA may be started for a minor, but that minor must have compensation (earned income). The IRS's definition of compensation may differ from yours, so check out pg 4 of 1998 IRS Publication 590 which can be down loaded at ftp.irs.ustreas.gov

As with any "custodial" accounts, the minor is not required to be disclosed of the account. Although, some institutions may require the child and guardian's signature if the child is over 13.

[Kathy]

I question the use of the term "Custodial Account" since, although the Code provides for a responsible party on an Education IRA and provides for a parent or guardian or other to act as custodian on a UGMA/UTMA account, there is no provision in section 408 of the Code for anyone other than the beneficial owner to establish or control an IRA. Also, remember that a minor does not have the capacity to execute a contract and therefore can not be held to it. I know that some institutions allow minors with earned income to establish IRAs - however, I question the idea of someone who does not have capacity to enter into such an agreement being able to uphold there end of the deal. I would love to hear what others think on the subject.

[Guest David Hammond SRS]

For many years I have advised my client financial institutions, that IRA's may indeed be opened by minors as long as the normal eligibility requirements are satisfied under IRC Section 408.

There are more and more instances where minors have earned income such as with child models, actors, paper routes and in more traditional instances where minors may work for there parents' businesses and are compensated realistically for small jobs performed. You can conjure up many more possible circumstances as well. I have personnally seen IRA's established

by infants (although who signs the Trust or Custodial Plan Document is another issue) who have earned incoime.

My concern is not so much in the establishment of the IRA and acceptance of a contribution but in the payment of funds to a minor. In all but diminimus circumstances I recommend that not funds be paid out to a minor but instead to their legally appointed guardian or

conservator. Parents of minors can in some states be appointed legal guardian by filing a perfunctory application with the court and paying a small fee.

As you enter into a contract with a minor at your own risk, institutions may

choose to do IRA business with minors in this manner or as policy not do business wtih them at all.

It's an interesting issue to contemplate. It contrasts IRA legality with institutional policy

Dave H.