Give a gift that will last a lifetime

Financial gifts that you give to your loved ones can provide benefits for many years to come. So here are 4 options that you need to consider:

● First one, fund an IRA. You can give your kids or grandkids an early start on a comfortable retirement. How? For 2015, you can contribute the lower of $5,500 or the earned income of the child to an IRA. Please note, your kids or grandkids needs to have a W-2 or business income in order to fund an IRA.

● Second one, fund a 529 education account. Contributions to a Section 529 college savings plan grow tax-free and withdrawals are also tax-free if you use it to pay for qualified school expenses of your child or grandchild.

● Third, fund a Coverdell education savings account. You can contribute up to $2,000 annually to a Coverdell account. These IRA-like accounts grow tax-free, though the total amount of your gift may be limited, depending on your income. For individuals, the income limit is $110,000, for married couples, its $220,000. So before funding this, make sure you know the income limitations.

● And lastly, fund a custodial account. Do you want to encourage your kids or grandkids interest in saving and investing? If yes, then buy shares in a mutual fund and combine the gift with a book on investing. Your kids or grandkids can watch the investment grow over time and enjoy dividend payouts too. Best of both worlds! Modest amounts of investment income can be tax-free to children, although the kiddie tax may apply at higher levels.

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Until then, this is Noel Dalmacio, your ultimate CPA at

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Noel Dalmacio, CPA, CFP, MS TAX
30 Corporate Park, Suite 102.
Irvine, CA 92606

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