oth and were to invest $2,000 on his or her behalf, the account would be worth over $203,000 when he or she reaches the age of 70, assuming a yearly average yield of 8% and monthly compounding. If that grandchild lives to a ripe old age of 80, the account would then be valued at over $450,000 -- tax free for qualified distributions.

As a retirement plan, the Roth beats having a simple CD or savings account. It also has many advantages over what is called a Traditional IRA. Unlike its Traditional IRA counterpart, a Roth IRA can be held t

Every holiday season sees a new trendy gift. Many years ago (and, perhaps I’m dating myself by mentioning this) one gift of choice was the Pet Rock. A Pet Rock was, well, a rock in a box with instructions. Of course, the funny instructions which came with the rock were the real gag of this gift. These instructions announced that the new Pet Rock owner now owned a pet that didn’t bark, disturb the neighbors, or wet the rug, etc.

After browsing the Internet several weeks ago, I located yet another trendy gift of the 2006 holiday season, this time for the "well to do": Old books. Apparently, old books are all the rage. These books often have tattered, tan bindings. But nobody really reads these books. Old books are not bought to be read, apparently, but instead to show and to be seen, like pieces of furniture.

What a waste.

Why give something no one will ever use? If you have a favorite working young adult who is impossible to buy for, why not consider funding their Roth Individual Retirement Account -- a Roth IRA? As long as they have compensation income of no more than $95,000 (with eligibility phasing out at $110,000 for an individual taxpayer) in the form of wages, salary and tips, your young person is would be eligible to contribute to such a fund. Of course, these upper income limits do not usually apply to a young adult. In 2007 the upper contribution limits for a Roth were, for workers under 50, the lesser of the full amount of their compensation, or $4,000. Workers over 50 may contribute a little more.

The process would be simple: You could help your young person open the account, and then fund the Roth account. However, although it is unlikely, a giver could have gift tax consequences by funding a Roth in this way. In 2006, the first $12,000 (and $24,000 per couple) of yearly gift giving is excluded from gift tax. After that point, the gift giver may need to consult with an attorney or an accountant to see if a gift tax return is required.

But no matter what all qualified withdrawals from a Roth IRA are income tax free. For example, if you were to help your favorite eighteen-year-old grandchild open up a Roth and were to invest $2,000 on his or her behalf, the account would be worth over $203,000 when he or she reaches the age of 70, assuming a yearly average yield of 8% and monthly compounding. If that grandchild lives to a ripe old age of 80, the account would then be valued at over $450,000 -- tax free for qualified distributions.

As a retirement plan, the Roth beats having a simple CD or savings account. It also has many advantages over what is called a Traditional IRA. Unlike its Traditional IRA counterpart, a Roth IRA can be held t

eason, this time for the "well to do": Old books. Apparently, old books are all the rage. These books often have tattered, tan bindings. But nobody really reads these books. Old books are not bought to be read, apparently, but instead to show and to be seen, like pieces of furniture.

What a waste.

Why give something no one will ever use? If you have a favorite working young adult who is impossible to buy for, why not consider funding their Roth Individual Retirement Account -- a Roth IRA? As long as they have compensation income of no more than $95,000 (with eligibility phasing out at $110,000 for an individual taxpayer) in the form of wages, salary and tips, your young person is would be eligible to contribute to such a fund. Of course, these upper income limits do not usually apply to a young adult. In 2007 the upper contribution limits for a Roth were, for workers under 50, the lesser of the full amount of their compensation, or $4,000. Workers over 50 may contribute a little more.

The process would be simple: You could help your young person open the account, and then fund the Roth account. However, although it is unlikely, a giver could have gift tax consequences by funding a Roth in this way. In 2006, the first $12,000 (and $24,000 per couple) of yearly gift giving is excluded from gift tax. After that point, the gift giver may need to consult with an attorney or an accountant to see if a gift tax return is required.

But no matter what all qualified withdrawals from a Roth IRA are income tax free. For example, if you were to help your favorite eighteen-year-old grandchild open up a Roth and were to invest $2,000 on his or her behalf, the account would be worth over $203,000 when he or she reaches the age of 70, assuming a yearly average yield of 8% and monthly compounding. If that grandchild lives to a ripe old age of 80, the account would then be valued at over $450,000 -- tax free for qualified distributions.

As a retirement plan, the Roth beats having a simple CD or savings account. It also has many advantages over what is called a Traditional IRA. Unlike its Traditional IRA counterpart, a Roth IRA can be held t

e of no more than $95,000 (with eligibility phasing out at $110,000 for an individual taxpayer) in the form of wages, salary and tips, your young person is would be eligible to contribute to such a fund. Of course, these upper income limits do not usually apply to a young adult. In 2007 the upper contribution limits for a Roth were, for workers under 50, the lesser of the full amount of their compensation, or $4,000. Workers over 50 may contribute a little more.

The process would be simple: You could help your young person open the account, and then fund the Roth account. However, although it is unlikely, a giver could have gift tax consequences by funding a Roth in this way. In 2006, the first $12,000 (and $24,000 per couple) of yearly gift giving is excluded from gift tax. After that point, the gift giver may need to consult with an attorney or an accountant to see if a gift tax return is required.

But no matter what all qualified withdrawals from a Roth IRA are income tax free. For example, if you were to help your favorite eighteen-year-old grandchild open up a Roth and were to invest $2,000 on his or her behalf, the account would be worth over $203,000 when he or she reaches the age of 70, assuming a yearly average yield of 8% and monthly compounding. If that grandchild lives to a ripe old age of 80, the account would then be valued at over $450,000 -- tax free for qualified distributions.

As a retirement plan, the Roth beats having a simple CD or savings account. It also has many advantages over what is called a Traditional IRA. Unlike its Traditional IRA counterpart, a Roth IRA can be held t

unt, and then fund the Roth account. However, although it is unlikely, a giver could have gift tax consequences by funding a Roth in this way. In 2006, the first $12,000 (and $24,000 per couple) of yearly gift giving is excluded from gift tax. After that point, the gift giver may need to consult with an attorney or an accountant to see if a gift tax return is required.

But no matter what all qualified withdrawals from a Roth IRA are income tax free. For example, if you were to help your favorite eighteen-year-old grandchild open up a Roth and were to invest $2,000 on his or her behalf, the account would be worth over $203,000 when he or she reaches the age of 70, assuming a yearly average yield of 8% and monthly compounding. If that grandchild lives to a ripe old age of 80, the account would then be valued at over $450,000 -- tax free for qualified distributions.

As a retirement plan, the Roth beats having a simple CD or savings account. It also has many advantages over what is called a Traditional IRA. Unlike its Traditional IRA counterpart, a Roth IRA can be held t

oth and were to invest $2,000 on his or her behalf, the account would be worth over $203,000 when he or she reaches the age of 70, assuming a yearly average yield of 8% and monthly compounding. If that grandchild lives to a ripe old age of 80, the account would then be valued at over $450,000 -- tax free for qualified distributions.

As a retirement plan, the Roth beats having a simple CD or savings account. It also has many advantages over what is called a Traditional IRA. Unlike its Traditional IRA counterpart, a Roth IRA can be held throughout the life of a taxpayer without the account owner being required to take minimum yearly distributions. While a Traditional IRA taxpayer has the option of withdrawing at age 59 1/2, he or she must begin withdrawing from the account and realizing income at 70 1/2 years of age. But a Roth IRA participant need not do this. Only the account owner’s descendants will be required to take mandatory distributions from the Roth IRA.

Roth IRAs are the best tax code deal around, and a great gift. And they sure beat rocks.

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