[dropcap]W[/dropcap]ith Mother’s Day around the corner, you might wonder if you should go beyond chocolates and flowers this year and give Mom something that can help her far into the future. What sort of financial gift can improve her life?
You could, for instance, encourage your mother to fund her IRA. As long as she has any earned income, she is eligible to invest in a traditional or Roth IRA (although a Roth IRA does have income limits which, if exceeded, will reduce and eventually eliminate contributions). In 2017, the IRA contribution limit is $5,500, or $6,500 for individuals 50 or older. Traditional IRA contributions may be deductible, depending on one’s income, and earnings can grow tax deferred. Taxes are due upon withdrawal and withdrawals prior to age 59½ may be subject to a 10% IRS penalty. Roth IRA contributions are not deductible, but earnings are distributed tax-free, provided an investor has had the account at least five years and doesn’t start taking withdrawals until age 59½.
You can’t contribute directly to your mother’s IRA, but you can give her money to use for that purpose, if she chooses. And since she has until April 17, 2018, to fully fund her IRA for the 2017 tax year, your gift now may help make it that much easier for Mom to “max out” on her account.
