Kids' savings accounts

[Little L]

I want to open either an Emigrant Direct or ING savings account for my kids. For those of you who have done this, did you open the accounts in your name or the kids' names?

I'm leaning towards doing it in my name but wonder about the tax implications once the balances get larger.

[TBH]

I opened one at ING in my son's name with myself listed as a secondary account holder.

[nanamom]

I opened one in my son's name with me on it as well. He is little now but will grow. I don't hav emuch in it as his college fund is in a mutual fund. He has his own bank account locally that he saves money in because the internet is still abit of an unnone to him but his bank book is very tangible. (he's 3)

[MonkeyMama]

Good Question. I was just wondering this too.

I was reading about putting money in kids names and 2 reasons not to - if you do it under UGMA (as a gift) the money is irrevocably theirs, you can't later use it very easily if you have an emergency. & also money in kids' names affect financial aid a lot more than in parent's name. Just FYI. I am not too concerned about either situation right now.

I hadn't considered just putting us both on the account. I Assume that is different. Can you then get the tax advantage? First $750/year of investment income is tax-free(something like that) if in the kids name.

Timely question, was thinking of opening a mutual fund for the kids. For now it will be a little while before we have the $3k minimum so I was thinking of just opening a c.d. in my name and then once the money is enough, putting it into mutual funds, and not splitting it into their own accounts until it grew to $6k (or whatever the minimum will be by then - times 2). Or we could start with a sharebuilder, just don't want to commit to too much since we don't want to put our money in.

IT seems in the meantime it would be easier to keep it in my name, though I'll put a kids name on it to save taxes.

The kids get lots of cash gifts. We have been using it as a maternity leave fund mostly, in past years, but were just talking about starting to save it for them, how a mutual fund can do really well for them over the next 16 years+. Grandma already has the 529 plan more than covered. I am open to any insights though how to hold the money though.

[PrincessPerky]

IMO It is the kids money, if you have an emergency, use your own..not theirs....

As to where to put it, I opt for a simple savings at first, and they can see it, check on it, watch it grow...internet is fine for mine, they see me on it all the time and my bank is online, so they don't think it odd.

Now that it is growing we are debating on somehting more complex, CDs at the least if not mutual funds..the thing about mutual funds is I think getting the kids interested in it is important, and mutual funds make very little sense to me much less them!

CDs on the other hand they can grasp fairly early.

One thing I would mention to anyone helping kids save TALK ABOUT IT! expecially talk about what it is for, it is not for a vacation in the Bahamas! (nothing wrong with those, but not what we are saving for) I tell the kids it is for 'big stuff' like a house of their own, or a car, or education if they need it (I am not all about college if they want it fine, but not all people are destined to be scholers)

[Ima saver]

I put my grandchildren into mutual funds. I found some with low minimums.

[Little L]

Originally Posted by MonkeyMama

IT seems in the meantime it would be easier to keep it in my name, though I'll put a kids name on it to save taxes.

So if I open it in my name and have their name on it too, is there a tax advantage to that?

I'm leaning towards doing it in my name for the financial aid reasons you talked about.

[kristinecfp]

Originally Posted by Little L

So if I open it in my name and have their name on it too, is there a tax advantage to that?

Not necessarily. If the account is titled with your name first, then the income is reported to your social security number and must be reported on your tax return.

[PRICEPLUS]

I put the money in Emigrant in my name. When the age of 18 is reached the money will be turned over.

[LuckyRobin]

For now we are just using regular savings accounts for the kids, but when their accounts hit $250 I plan to open ING accounts for both of them, so they can get the bonus money. I don't think they will ever have grand amounts in them until they are older. But as soon as they start their first jobs we will open IRA's for them and shift what we can over into those and then we wouldn't have to worry about being taxed on that interest and I don't think they can count those towards financial aid.

If they really want to save up for something like a car or a trip to Europe, I'd open a joint account for that.

[MonkeyMama]

Originally Posted by Little L

So if I open it in my name and have their name on it too, is there a tax advantage to that?

I'm leaning towards doing it in my name for the financial aid reasons you talked about.

I don't know - I am trying to figure that out. The kid's name and SS# would have to be first on the account.

I am still not sure if that works though - info is vague out there.

[MonkeyMama]

I just saw Vanguard Star Fund has $1k minimum. Think will start with $1k each.

[MonkeyMama]

[quote=PrincessPerky]IMO It is the kids money, if you have an emergency, use your own..not theirs....

If it was the kids money it wouldn't be in our names.

Sorry I strongly believe in taking care of ourselves first before the kids. The grandparents are generous but they trust use to spend the money well for the kids benefit - they give us the money to spend. If they wanted a savings account they would open it. When they give us money we discuss it, I actually think they will be annoyed when we start saving it but whatever, they give it to us, it is our choice.

[Ima saver]

I agree with monkeymama, I think you should save for yourself first, before the kids. I opened a savings account for my daughter when she was little and put money into as often as I could. When she turned 18, she took the money out, bought a car she did not need and totalled it out within the month. All those years of saving were for nothing.

[PrincessPerky]

My kids savings comes from their gift money..their money..I have my own savings account with my money, but theirs is their money, they recieved it, I just help them deal with it. I wont be taking it fom them, when they get jobs it will still be their money, I will just help them find interest rates and budget. I had a job at 12, half of all my income was required to be deposited in the bank...wanna know where it went? so do I.....

I don't have any intentions of 'tunring the money over' instead I now ask them what sort of things the money is for, and asking them why we point money in, and asking them how much of each gift they recieve should go int, I also plan on asking them how they want to grow it/invest it by 12, and by 16 I figure they will want a car, we will together decide what kind of car they can afford..(cleaning out the fund is not a good idea, and we will be discussing this and the reasons why) by 18 they will be making money, paying bills, and helping decide what amount of the income needs to go to saving, what to church, and what to goofing off.

Now at I might be totally wrong......but it is the goal anyway.

Oh and if there is a MAJOR emergecny, one where the kids would be asked to get jobs and help pay for the household bills yeah sure then the money might be needed...I say MIGHT, because it would take some serious issues before I would do that (I would sell ALL our junk and consider living with family before I would use their money)

[MonkeyMama]

Look I am not going to argue, I just wanted to defend myself. I could go on and on all day, you don't know me and the fact I would never touch the kids' money unless I had to. & that the money we have gotten to date we have all agreed to do elsewith than save it. That is my perogative. Anyway I didn't want to arge about it. Just to defend the fact that I am not out spending my kids money willy nilly, and I never would. When I think emergency I think if I Could not afford them food or shelter otherwise. But I am looking at the UGMA accounts and it seesm you can use it as long as it is for the benefit of the child and you could withdraw it in such a catastrophe, which is really my only concern. But overall to each their own.

I think you and I just come from 2 very different angles. My parents never spoiled me and I never had money in my name from family, but I have something much greater. I have a well off family to fall back on, who has always supported me. A family who would never take the money I Earned from me. I am not going to put any money in their name to do with what they want until I know that we can take care of ourselves, and even moreso THEM, first. My dh is far more spoiled and his parents really spoil the kids. BUT I get the feeling it is a hell of a lot more likely we will be caring for them later in life than caring for my parents. I am not sure that makes the gifts so great in the long-haul. I just hope they are caring for themselves too.

Plus it sounds like this really could come down to a debate if money spent for the kids benefit is really lesser than money saved for the kids. I don't think that is so black and white. Could be an interesting discussion...

[PrincessPerky]

hey you don't have to defend your position, I felt like I had to defend mine....ironic IMO
I never ment to put anyone on the defensive, just meant to point out something. and I personally think the rest of my first post is way more important than the first line....

No it isn't so black and white, and if the money starts as yours it is certainly a lot greyer than when it starts as theirs.

and nope I don't know you at all or your situation or anything, and same in reverse really. (our cash giving family for one is well todo, and well positioned in retirement)

[cheapdoggy]

Check into Scottrade. I have my kid's money there. It's under my name and I think it pays 2% on cash in your account. I bought shares of Mcdonalds,Chuck E Cheese and Disney...companies that they can understand.
I don't know what the minimums are but it's probably found easily on their site