| Sargent & Lundy Savings Investment Plan |
| KIDS' ROTH IRAS & COLLEGE AID |
| The following excerpts are from an article in the December
1998 issue of "Mutual Funds" magazine. The opinions expressed
may or may not reflect those of the SIP Committee.
Q. How should we advise our college and high school-aged children? They have part-time jobs and we'd like to encourage them to begin modestly investing in a retirement Roth IRA. Would investments such as these be a detriment when applying for undergraduate and graduate financial aid? A. Encouraging kids to start contributing to IRAs at an early age is a great idea. Nonretirement assets owned by children, either directly or through Uniform Gifts/Transfers to Minor's Accounts, can work to their detriment when applying for financial aid. In its useful free booklet, "9 Tips for College Savers," Neuberger & Berman (800-877-9700) notes that colleges expect a student to contribute approximately 35% of his or her assets toward college costs, while the percentage expected of the parents is far lower. Thus, shifting assets to a child may increase the amount that a particular college expects the child to pay and reduce their changes of receiving financial aide from that institution. However, assets in an IRA or other retirement account are specifically excluded from those that students or parents must report when completing the standard Application for Federal Student Aid that is the first step in virtually all student-aid processes. So go right ahead and launch those kiddie IRAs now. |
This page updated on 11/23/98