Author Topic: UTMA to a Roth IRA for a child?  (Read 222 times)

bpage12

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UTMA to a Roth IRA for a child?
« on: May 03, 2019, 09:03:41 AM »
I want to open a Roth for my kids but they have to have earned income and they are too young for that as of now.  Can I open up an UTMA account and fund it for a few years and then convert it to a Roth for them?

MDM

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Re: UTMA to a Roth IRA for a child?
« Reply #1 on: May 03, 2019, 11:00:29 AM »
I want to open a Roth for my kids but they have to have earned income and they are too young for that as of now.  Can I open up an UTMA account and fund it for a few years
Yes.

Quote
and then convert it to a Roth for them?
No.

seattlecyclone

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Re: UTMA to a Roth IRA for a child?
« Reply #2 on: May 03, 2019, 05:19:53 PM »
There's no direct conversion available, but I know of no reason why you couldn't take money from an UTMA account and move it to an IRA in their name, up to their contribution limit each year (lesser of $6,000 or their earned income). The kid would have to recognize any capital gains from the UTMA as income in the year you move the funds, which at lower amounts will often not be taxed federally.