Author Topic: Savings Account for Child (Other than 529)  (Read 1260 times)

lilsaver

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Savings Account for Child (Other than 529)
« on: December 13, 2021, 10:28:20 PM »
I have a 529 for my daughter, but also want to start a general savings account for her in her name (not to be tied for education, but for her to use for other purposes like a wedding, house fund, retirement, etc.) What's the best way to approach this?

nereo

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Re: Savings Account for Child (Other than 529)
« Reply #1 on: December 14, 2021, 04:40:22 AM »
Own old is your daughter? 

Sibley

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Re: Savings Account for Child (Other than 529)
« Reply #2 on: December 14, 2021, 08:37:46 AM »
Assuming she's a minor, she's not legally competent. You can talk to the bank to see what kiddie accounts they have, but an adult's name will have to be on the account. If you're talking about a teen then the options might start opening up, but I think you still need to have an adult on the account.

SailingOnASmallSailboat

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Re: Savings Account for Child (Other than 529)
« Reply #3 on: December 14, 2021, 08:46:23 AM »
What a nice thing to be thinking about, to help future her with big expenses.

Remember that if you open an account in her name, it's her money, meaning that she can use it however she sees fit. Hookers and blow, if that's her choice. If you want to have money set aside to help her with future expenses like a wedding or a house or retirement, you might think about a separate account in your name so you have control over how the funds are used.

Jules13

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Re: Savings Account for Child (Other than 529)
« Reply #4 on: December 15, 2021, 12:07:27 PM »
Just remember that when it comes to college, savings in her name is assessed at 20% vs just under 6% for savings in your (parents) name.  If you put that money in a Roth in her name though (since you mention longer term goals like home buying/retirement) it counts as a retirement account and won't affect potential college aid money. 

lilsaver

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Re: Savings Account for Child (Other than 529)
« Reply #5 on: December 20, 2021, 08:54:21 PM »
Own old is your daughter?

Just born, but wanted to get a head start on the planning

lilsaver

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Re: Savings Account for Child (Other than 529)
« Reply #6 on: December 20, 2021, 08:55:30 PM »
Assuming she's a minor, she's not legally competent. You can talk to the bank to see what kiddie accounts they have, but an adult's name will have to be on the account. If you're talking about a teen then the options might start opening up, but I think you still need to have an adult on the account.

Oh I see. Thanks for the info. Will look into this.

lilsaver

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Re: Savings Account for Child (Other than 529)
« Reply #7 on: December 20, 2021, 08:57:01 PM »
What a nice thing to be thinking about, to help future her with big expenses.

Remember that if you open an account in her name, it's her money, meaning that she can use it however she sees fit. Hookers and blow, if that's her choice. If you want to have money set aside to help her with future expenses like a wedding or a house or retirement, you might think about a separate account in your name so you have control over how the funds are used.

Yes, that's the downside, not knowing how they will use it. I'll look into if accounts has some kind of restrictions for use then.

lilsaver

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Re: Savings Account for Child (Other than 529)
« Reply #8 on: December 20, 2021, 08:57:43 PM »
Just remember that when it comes to college, savings in her name is assessed at 20% vs just under 6% for savings in your (parents) name.  If you put that money in a Roth in her name though (since you mention longer term goals like home buying/retirement) it counts as a retirement account and won't affect potential college aid money.

I'm assuming if it goes into a Roth in her name, it has to be earned income that she makes. Is that right?

la Condessa

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Re: Savings Account for Child (Other than 529)
« Reply #9 on: January 05, 2022, 01:24:12 PM »
We use Beehive Federal Credit Union's Mission Savings accounts for this purpose.  We direct deposit $100 per month into each kid's custodial account, and they earn 3% quarterly.  Our goal is $10,000 per kid plus a couple thousand more from interest for those other-than-college expenses. 

PMG

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Re: Savings Account for Child (Other than 529)
« Reply #10 on: January 05, 2022, 04:52:38 PM »
If the child is an infant, would it make more sense to invest in your name (perhaps in a separate account to make it easy) and let the funds grow for 20-30 years until the child is ready for homes and weddings and such, then gift as appropriate?