spending

Financial Gifts for Kids

Invest in a child’s future with gifts of stock or contributions to a Roth IRA or college savings.

Question: I would like to give my niece a meaningful gift this holiday, not just a check or a sweater. What are the best financial-related gifts? -- J.T., Brick Township, N.J.

Answer: Several gifts can help your niece get more of a head start with her finances than if you just sent her a check.

If she earned any income from a job, you can give her money to contribute to a Roth IRA -- up to the amount she earned for the year, with a $5,500 maximum in 2018. She can withdraw the earnings tax-free in retirement and can tap the contributions anytime without taxes or penalties.

You or her parents will need to sign extra forms to open a custodial Roth IRA if she’s a minor. Fidelity and TD Ameritrade offer custodial Roth IRAs with no minimum and no maintenance fees. Charles Schwab has a $100 minimum and no maintenance fees.

You can contribute to a 529 plan, which she can use tax-free for college. Many states offer a state income-tax deduction for the gift (but not New Jersey; see www.savingforcollege.com for each state’s rules). Many 529s participate in the Ugift program (www.ugift529.com), which makes it easy for family and friends to contribute online. Other 529 plans, such as those offered by Fidelity and T. Rowe Price, have their own gifting programs.

Or you could give her some shares of stock. Online brokerage firm Stockpile offers gift cards on its site or at retailers such as Target and Staples. You can give from $1 to $2,000, which your niece can invest in her choice of more than 1,000 stocks and track through a kid-friendly app.

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