Is there any non-pain-in-the-butt way to set up a Roth IRA for a dependent?

Contributions to an IRA (any IRA) must be "earned income" and that makes it, as you say, a pain for a child who isn't old enough to work yet.

Some alternatives:

1. A Roth IRA in your name, and/or the name of your spouse. If you have already funded one for yourself, then consider the next options:

2. A non-qualified deferred annuity. These come in three distinct flavors: Variable, fixed, or indexed. All three grow tax-deferred, and a child can be the annuitant and contract owner. Uniform Gift to Minors Act, or UGMA, provides that an adult may make a lifetime gift of an annuity to a minor by giving control of the funds to a custodian. To qualify under UGMA, the annuity must be issued with the minor as the annuitant and the contract owner. The adult signs the application as “Custodian under UGMA”. Any distributions taken from the annuity are reported under the minor’s Social Security Number. Please note that the adult who signs the application, as “Custodian under UGMA” has NO rights of any kind to this annuity contract. Alternatively, you can make the annuitant you, your spouse, or grandparent, if you want to either maintain control, or avoid the 10% penalty tax on withdrawals prior to age 59½ (these penalties can be avoided under certain circumstances, but that's beyond the scope of a relatively short answer here).

2. Permanent life insurance. You can purchase a policy on your daughter's life, or your own life, or both. You could also purchase a policy on the life of a grandparent. Life insurance is one of the last remaining tax-shelters, when it is set up properly. One can fund a life insurance right up to what is called the Seven Pay Limit, or TAMRA Guidelines (Technical And Miscellaneous Revenue Act of 1988), thereby avoiding the risk of the policy becoming what is called a Modified Endowment Contract. What this means to you is that the non-MEC policy grows tax-deferred, just like the Roth IRA, and the policy pays death benefits income tax-free, just like a Roth IRA. Properly structured, a permanent life insurance policy can provide tax-free retirement income, just like a Roth IRA. The differences are that the life insurance policy has no contribution limits, unlike the current Roth IRA limit of $5,000 per year. There is no requirement that premiums be paid with earned income, either. The downside is that most life insurance policies require regular premium payments for several years, whereas you could fund a Roth IRA one year, and never contribute again. The exception would be a single premium life policy (for example, on a grandparent), where the ultimate distribution will be in the form of an income tax-free claim check. Another advantage is that you can maintain ownership of the policy well into your child's adult years, which gives you some spendthrift protection. Any investment in your child's name carries with it the risk that the child takes it all out at once when they reach age of majority and throws a real big party on your dime. I've seen this happen to the most well-intentioned parents, so the risk should not be ignored.

3. An index mutual fund in an account under UGMA. While not 100% tax-deferred, because of the very high corporate income tax rates, and the double-taxation of common stock dividends under our current tax regime, many public companies are not paying high dividends, so the taxable yield of an stock index fund is pretty low. For example, the S&P 500 Index had a taxable yield of about 1.84% in 2010, so an index fund that tracks that index should be similar. The capital appreciation or growth in a mutual fund isn't taxed until the shares are sold (the same goes for most capital assets). There are no limits on how much you invest, and no requirement that your daughter have earned income. The downside is that there's no guarantee that any mutual fund with grow, and no protection from creditors or predators, whereas the non-qualified annuity or life insurance may offer some additional creditor and predator protection (this varies by state, see the link below for more information). Another downside is that an UGMA account in your child's name is considered an asset available for use to pay for college using the current Free Application for Federal Student Aid (FASFA) form, while a deferred annuity, a life insurance policy, an IRA or other retirement plan is not counted against her if and when she applies for any financial aid for college. Of course, these rules are most very likely to change over the next two decades, so your mileage may vary.

Banks cost you an annual upkeep cost for having a Roth IRA( $15-$30). They cost intense cost for procuring and advertising too, approximately $40 5 per commerce. some brokerages have not got any upkeep expenditures like constancy or Scottrade. Commision is plenty decrease too ( below $10.00 per commerce) and function a team of concepts to come to a decision on between. IRA (guy or woman retirement account) in basic terms serves as a automobile the place you pick for shares, bonds, mutual money, cds, ETFs to take a place in interior the account. in case you have a Roth IRA, all your investments interior your retirement account grows tax loose and tax loose once you withdraw at retirement. you may additionally p.c.. an already set up different portfolio with the 12 months you pick to retire in on your Roth IRA account. they'll p.c.. the money for you and handle your IRA account as a replace of you having to come to a decision on which shares, bonds, mutual money, ETFs to place into your retirement account.

without earned income from a job, you are not allowed to have any kind of retirement acct