I’ve heard this is a good way to set your kid up for success and take advantage of compounding. One of the parts I always get caught up on when looking into it, is that your kid needs some form of taxable income, and whatever they contribute, you can match it.
If you have a child that is just a couple years old, how do you accomplish this? I can’t just say I pay her $3000 a year for picking a book to read each night…or can I?
Your kid would need reported W2 income to be eligible. Start a 529 plan instead.
My state gives me 10% back as tax refund for contributing up to $5000 a year to my kids 529.
I need to look into that for mine. I live in Ca but I have a NY 529 (they have a solid performance history). So I wonder if I’d still qualify for any incentives
I’m no expert, but I’m gonna say no. Your child would need to have earned income. Allowances or getting paid for household chores isn’t going to cut it.
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