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Follower ○○

New deadline for 2019 Roth IRA

Since the deadline for the 2019 Roth IRA has now changed to July 15, 2020 .... I am thinking of helping fund my daughters  Roth contribution for 2019 ($6000), plus then I could go ahead and fund her 2020 contribution (another $6000) right away as well. 

She is 38 years old with 3 kids and husband, so there is nothing left for her to put into a Roth for her retirement. She works from home so she has earned income to be entitled to Roth contributions. This is just something I have wanted to do for her, but have always put it off. With all this COVID-19 stuff going on, it makes one think. I am 70 and think I am pretty healthy, but things could change quickly if one would get the virus. 

So my question to you all is how to recommend to her to invest. She has no idea, and my knowledge is limited. That is why I have gone with an asset allocation plan, with balanced funds for my retirement, but she still has 20-25 years or more.  Would she want to invest in a balanced fund,or a index fund, like the total market index fund? Or is this even a good time for her to invest? Should she dollar cost average, or invest a lump sum all at once? All thoughts or suggestions will be appreciated. 

Thanks in advance - Jody

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4 Replies
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Participant ○○○

Re: New deadline for 2019 Roth IRA

With a 25 year + time horizon, and index fund like VTI or VOO would be good, as long as she can deal with the volatility (or better yet can refrain from looking at the statements).

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Participant ○

Re: New deadline for 2019 Roth IRA

Jody,

I would suggest you change the subject title to something like: "I want to fund a Roth for DD; which fund?"

Which should get more answers.

A general response is a broad-based stock market fund, probably an index fund.

Please acquaint yourself (if you haven't already) with tax treatment of gifts (I assume you would gift your daughter the funds, and also assuming you may be making other smaller gifts during the year).

Also, is her husband already funding a retirement account or plan for her?

Another avenue for helping is to contribute to an education fund for children.

In all this, you want not to beggar your own retirement life. For all, it looks much less certain these days.

Good luck!

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Frequent Contributor

Re: New deadline for 2019 Roth IRA

@ViveBene makes several good points.

The annual gift limit is now $15K/yr/person. That does cover 2 years worth of IRA for your daughter. Exceeding the annual limit only means that Form 709 has to be filed - there are no immediate tax consequences. A stock-blend fund or moderate-allocation fund may be used.

529 for kids should be considered if there are state tax incentives. A grand parent can open 529 for grand kid(s), or gift money to parent who open 529 for their kid(s). Each 529 can have only one beneficiary.   https://529.morningstar.com/state-map.action

YBB
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Frequent Contributor

Re: New deadline for 2019 Roth IRA

A loving thought as a mother. 

I would do 2019 in a lump sum and DCA (monthly) for 2020; maybe in S&P 500 index fund.  Just an input.

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