Managing My 70 yr old Mother Account????


Quincy, my mom is 70 yrs.  She doesn’t make very much money.  I was wondering if i opened up an account in her name can I work or manage the account? Instead of my handing her the cash in the account, would this be beneficial to us both?  I’m also thinking about converting her IRA to a Roth IRA.


There could be substantial benefits in doing so.  The good news is that her contributions to the account may be removed at any time tax and penalty free, regardless of her age or the length of time the account has been open.  She may not contribute more than her earnings, so you will have to be careful there.  She can make the contribution all the way up until April 15 of next year for this year.  Because she can withdraw the contribution amount at any time, contributing money to a Roth IRA is a great way for your Mom to save.  Because she is over 59 ½ there would never be a penalty for removing funds from the Roth IRA.  However, if she removed more than her contribution amount (in other words, she took her profits) before she has had a Roth IRA established somewhere for her benefit for at least 5 tax years, the distribution may be taxable even though it is from a Roth IRA.  The magic happens once she has satisfied the 5 year aging requirement.  At that point all distributions are completely tax free.  If she doesn’t end up withdrawing all of the money before she passes away and you inherit the Roth IRA, then you can take tax and penalty free distributions from the account for the rest of your life, regardless of your age.  The bottom line is that in my mind, at least, there would be benefits to both of you if you helped her open and work a Roth IRA.  The key to the benefit is that you actually work the account and not just let it sit there doing nothing. 

Let me know if we can help any further.  Have a great day!

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