Graduation season is here, which
means you have gifts to consider.
Although there are plenty of options, here are three invaluable suggestions
that can help college grads achieve financial success.
Contribute to a retirement account
You can fund the college grad’s Roth
individual retirement account (Roth IRA) – which is a great way to help a
graduate build a nest egg. There is no minimum
age or balance requirement to open a Roth IRA.
As long as he or she earns from a job, you can fund the Roth IRA up to
the legal total contribution limit of $5,500 (for 2017) or the amount of his or
her earnings, whichever is less. Your gift will be made with after tax dollars and will grow tax free. After the account has been open for a minimum of five years and your grad reaches age 59 1/2, the earnings can be withdrawn tax free.
Give shares of stock
If you gift shares of stock you
own, you can help your graduate build an interest in the stock market and he or she can develop investment management skills. On the
date the stock ownership transfers, your cost basis will also transfer to the
graduate and a new holding period will begin.
When the appreciated stock is sold, any capital gains will be taxed at
his or her rate – and recent graduates will typically be in a lower tax bracket.
Pay for a session with a financial advisor
This gift can be very useful to a
college graduate trying to understand budgeting, student loan payments, 401(k)
plan contributions, housing, and credit card management. A session with a financial advisor can help a recent grad navigate his or her financial world and establish good financial
habits that last a lifetime.
Although these ideas are general
in nature, it is always a good idea to understand the tax implications that
apply to your unique situation. Remember
to discuss your plans with a tax advisor before you give a gift. Call 847-580-4100 to talk to a KOS Tax
Professional today!
Best of luck and congratulations to you and your graduate!
