#637: Q&A: Is it Possible to Open an IRA for Another Person's Child? (And Is It a Good Idea?)

      Nick: What’s the most effective way to establish an investment account as a gift for my nephew? Should I opt for a traditional brokerage account, an IRA, or are there other suitable options available since I’m not his parent? I’ve just become an uncle and would like to create an investment account for him to which I can contribute each year, helping to build a fund for his college education. His parents are already setting up a 529 plan, so I’m contemplating a traditional brokerage account but I'm uncertain if that’s the best choice.

      Diana: Is a TIPS ETF necessary in my portfolio to safeguard my retirement savings against inflation? Furthermore, if TIPS are indeed advisable, how should individuals in their peak earning years manage the associated tax implications? I’m curious if I can offset inflation simply by realigning my portfolio with investments that yield returns above the inflation rate. This strategy has left me a bit perplexed compared to opting for Treasury Inflation-Protected Securities.

      Prethive: Should I choose a traditional or Roth 401(k) with regard to state taxes? What are the state tax implications for a pre-tax 401(k) if someone relocates overseas? Could this geographic tax strategy potentially result in significant long-term savings? There are states that impose no income taxes, while others do not tax retirement income. What if individuals made pre-tax contributions throughout their careers and then relocated to one of these tax-friendly states upon retirement? If someone resides in a state with no taxes and later retires abroad, would they completely evade state taxes? Currently, my partner and I are in the 12% tax bracket and have been contributing to a Roth 401(k), but I’m contemplating whether we should switch to pre-tax contributions before moving to a more tax-friendly state or even retiring internationally. Is it worth the mental effort, or should I just continue with Roth contributions?

      Resources Mentioned:

      affordanything.com/assetlocation

      treasurydirect.gov

      stackingbenjamins.com/hsa

      Interview with Nick Maggiulli about the wealth ladder

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