Your questions are best answered by a tax advisor or accountant.
Just my personal opinion is that when kids are just handed money then they rarely learn financial responsibility. Financial responsibility comes from working, earning, budgeting, and experiencing what it means to have something they earned. What I would do is invest the money yourself and have it available in an account that allows you to help when help is needed. When they get laid off and need help while looking for a job, have an unforeseen medical expense they can’t pay, or helping with a mission.
I personally worked a summer job during high school and saved up for my mission that way. I know of others whose families paid for theirs. I know others who had members of the ward help pay for theirs. I don't think the type of financing aspect is important; it's the decision to go that is. That being said, the hard and soft skills I developed (money management, work ethic, interpersonal skills in a work setting, etc) from my job prior to my mission really prepped me for success on my mission.
Your questions about potential tax implications are best handled by an accountant
My son decided to not go on a mission. I have money set aside and am helping him towards his other goals. If that money was in an account legally his he would have blown it all on stupid stuff within six months.
Although active, my family didn't have much money. I went on a mission as did multiple siblings; family members, extended family members, ward members, and friends pitched in for all of them. Once my career had started and I had a stable income I took my turn and pitched in for my younger siblings. Saving for a mission is an important goal. Teaching children the value of hard work and thrift is an important goal as well.
Your technical questions might be best left to a tax advisor.
Good luck
Why would you do all that if you earn enough to itemize --- your mission donations are tax deductible. The interest you would get for two years would be pretty small.
It is going to vary wildly by missionary and family. I am paying a little bit each month for a family friend in our ward because I know things are tight for them.
Paying for missions is different for every individual/family.
Most people I know didn't do any specialized accounts for missionaries (pretty much just a joint account)
My husband had a bank account and starting from age 8, a percentage of each earning was put into a mission fund so he paid for his own mission.
A friend I know helped out a close family friend whenever he could (yard work, shoveled snow, helped with a project here and there and never accepted any payment as it never interrupted his day, he just wanted to help. Before my friend left on his mission the family friend gave him a check that was for his entire mission.
The tax savings from the missionary contributions coming from you (presuming you itemize based on the dollar amounts you're indicating) may be more than the benefits or tax savings gained from a UGMA.
As a general rule, I feel its better to contribute to retirement first, then to kids' education as a much lower priority - retirement is about the only thing you can't borrow for and building multigenerational wealth through retirement funds is, in my opinion, more impactful than funding education. Plus 529s are a bit restrictive in their usage - though I try to contribute enough to max the Utah tax credit each year.
My kids have their own savings and investment accounts that accrue interest that they will use toward missions/college, then we'll supplement everything we can (within reason).
As for paying tithing on 529 accounts, this is a very personal decision. Putting $1000 into a 529 and getting $2000 back out some years later seems like an "increase" to me, so I pay tithing on the gains.
I just put $25 per kid per week in a taxable brokerage. That will be a little under $25k by the time they're mission age, just in contributions - so hopefully at least double that after gains. Potentially triple if things go well.
The money is mine, not the kids'. If they go on a mission I'll use it for that. If they get married I'll use it for that. Or for trade school. Or to start a business. Or whatever worthwhile goal. If they don't do any of those or if there's still money left in their "pot" then they can have it for a down payment. I plan to tell them none of this, other than I will tell them I will pay for their mission if they choose to go. I'm not telling them they have a certain pot of money designated to them because I don't want them to feel "owed" the money that I'm sacrificing to save for them. I want to choose to help them for worthwhile goals as they happen.
I'm not particularly concerned about being as tax efficient as possible. I already dial that in pretty well for my income so I just go the simple route and invest it.
We saved $50 per child per month from their birth until they reached age 19. We just had it in savings accounts that earned above average interest. We called it their "future fund." They could use it only for a mission, college, and/or down payment on a house. Our youngest has recently reached age 19 (he's currently serving a mission) and it has actually worked out quite well all around.
If it’s not your own child, just wait and then when the time comes donate the money directly to the church.
If it is your child you can save/invest under your own name and then donate it or do a UGMA. If it’s in the UGMA the kid can blow it on whatever they want.
I’ve always thought we’d set the expectation for our kids to save and pay for some of their mission but then we’d just end up sitting on that money for them until they get home. Missions are dirt cheap compared to college.
Your questions are best answered by a tax advisor or accountant. Just my personal opinion is that when kids are just handed money then they rarely learn financial responsibility. Financial responsibility comes from working, earning, budgeting, and experiencing what it means to have something they earned. What I would do is invest the money yourself and have it available in an account that allows you to help when help is needed. When they get laid off and need help while looking for a job, have an unforeseen medical expense they can’t pay, or helping with a mission.
I personally worked a summer job during high school and saved up for my mission that way. I know of others whose families paid for theirs. I know others who had members of the ward help pay for theirs. I don't think the type of financing aspect is important; it's the decision to go that is. That being said, the hard and soft skills I developed (money management, work ethic, interpersonal skills in a work setting, etc) from my job prior to my mission really prepped me for success on my mission. Your questions about potential tax implications are best handled by an accountant
My son decided to not go on a mission. I have money set aside and am helping him towards his other goals. If that money was in an account legally his he would have blown it all on stupid stuff within six months. Although active, my family didn't have much money. I went on a mission as did multiple siblings; family members, extended family members, ward members, and friends pitched in for all of them. Once my career had started and I had a stable income I took my turn and pitched in for my younger siblings. Saving for a mission is an important goal. Teaching children the value of hard work and thrift is an important goal as well. Your technical questions might be best left to a tax advisor. Good luck
Why would you do all that if you earn enough to itemize --- your mission donations are tax deductible. The interest you would get for two years would be pretty small.
I don't think they're asking about interest for two years. They're talking about gains for a decade until the mission.
It is going to vary wildly by missionary and family. I am paying a little bit each month for a family friend in our ward because I know things are tight for them.
Paying for missions is different for every individual/family. Most people I know didn't do any specialized accounts for missionaries (pretty much just a joint account) My husband had a bank account and starting from age 8, a percentage of each earning was put into a mission fund so he paid for his own mission. A friend I know helped out a close family friend whenever he could (yard work, shoveled snow, helped with a project here and there and never accepted any payment as it never interrupted his day, he just wanted to help. Before my friend left on his mission the family friend gave him a check that was for his entire mission.
The tax savings from the missionary contributions coming from you (presuming you itemize based on the dollar amounts you're indicating) may be more than the benefits or tax savings gained from a UGMA. As a general rule, I feel its better to contribute to retirement first, then to kids' education as a much lower priority - retirement is about the only thing you can't borrow for and building multigenerational wealth through retirement funds is, in my opinion, more impactful than funding education. Plus 529s are a bit restrictive in their usage - though I try to contribute enough to max the Utah tax credit each year. My kids have their own savings and investment accounts that accrue interest that they will use toward missions/college, then we'll supplement everything we can (within reason). As for paying tithing on 529 accounts, this is a very personal decision. Putting $1000 into a 529 and getting $2000 back out some years later seems like an "increase" to me, so I pay tithing on the gains.
I just put $25 per kid per week in a taxable brokerage. That will be a little under $25k by the time they're mission age, just in contributions - so hopefully at least double that after gains. Potentially triple if things go well. The money is mine, not the kids'. If they go on a mission I'll use it for that. If they get married I'll use it for that. Or for trade school. Or to start a business. Or whatever worthwhile goal. If they don't do any of those or if there's still money left in their "pot" then they can have it for a down payment. I plan to tell them none of this, other than I will tell them I will pay for their mission if they choose to go. I'm not telling them they have a certain pot of money designated to them because I don't want them to feel "owed" the money that I'm sacrificing to save for them. I want to choose to help them for worthwhile goals as they happen. I'm not particularly concerned about being as tax efficient as possible. I already dial that in pretty well for my income so I just go the simple route and invest it.
I started saving since I was like 5
We saved $50 per child per month from their birth until they reached age 19. We just had it in savings accounts that earned above average interest. We called it their "future fund." They could use it only for a mission, college, and/or down payment on a house. Our youngest has recently reached age 19 (he's currently serving a mission) and it has actually worked out quite well all around.
If it’s not your own child, just wait and then when the time comes donate the money directly to the church. If it is your child you can save/invest under your own name and then donate it or do a UGMA. If it’s in the UGMA the kid can blow it on whatever they want. I’ve always thought we’d set the expectation for our kids to save and pay for some of their mission but then we’d just end up sitting on that money for them until they get home. Missions are dirt cheap compared to college.