Carmen tackles the Lightning Round

Decorations adorn a large Christmas tree.

We get way more questions than we could ever hope to answer, so that's why we created the lightning round. Five minutes of personal finance, and we're tackling questions about gifts, donations ... a bit of holiday spirit in the shape of stocks, bonds, IRAs, and college savings. This week, we're joined by Ben Johnson, host of Marketplace Tech.

Gene says his girlfriend recently set up a brokerage account, and he wants to give her a hundred shares of a stock we both invest in as a gift. Are there any taxes associated with giving a gift of stock? The current market value of the stock would put it at around $2000.

Carmen: "First of all, diversify and not just own one stock. Beyond that, there are some tax implications on financial gifts, but the max for 2013 is actually $14,000 before you have to report it to the tax man. So that's your exclusion. For information on 2014 and beyond, check out irs.gov."

Read more on gifting stocks

Erin through our Facebook asks, "What's the best type of account or best way to set one up so family members can contribute to it?"

Carmen: "That would be a 529. Those 529's, consider those the IRAs for college education. And not only can multiple family members put money in there, but should that child not use the money [and] there's a sibling, the sibling gets to use the money. Go to savingforcollege.com for free info."

Aries wants to know what's the best way to give a college fund to her brother's kids?

Carmen: "Open a 529. Family members can open a 529 for other folks. So that is awesome. And if you start it, you can even ask the rest of the fmaily every year, that instead of buying, you know more plastic stuff, that they could actually put more money in that account. But you want to make sure that if they already have a college fund, that you talk to them about it and see what form it is. If they don't have a 529 and you don't want to open one either, just send them a check and say: 'Please put this into the college account.'"

More advice on 529 plans

Also from Facebook, Jennifer says her 11 year old son wants to get to know investing. She's thought about giving him a penny trading account with $100 in it, but doesn't know if that would really help him learn. Getting him one or two shares of a stock he likes would work, but what if it tanks? What's the best holiday gift to help a young'un learn something mama doesn't already know how to do?

Carmen: "You don't have to have money invested to learn how to invest. What you want to do is make sure he just has the basics ... you want to make sure that you also have him understand cash, credit, banking accounts, all of that stuff as well. If you want to fiddle around and you want to play around on the market but you don't want to risk real money, Marketwatch from wsj has a virtual stock exchange."

Other ways to encourage kids to save

About the author

Carmen Wong Ulrich is the former host of Marketplace Money, APM’s weekend personal finance program.
Log in to post4 Comments

Regarding the last question (from Mary) and the answer (both of which are now removed from this site) and Mmbright's prior comment, this is a complicated subject, but the on-air comment was in error.
a. you can never gift a retirement acct, but you can name beneficiaries who obtain ownership upon one's death. During life, the owner must take a distribution, subject to whatever their tax/penalty situation is, then give a regular gift.
b. the IRS does not prevent but instead requires beneficiaries to take retirement acct funds out within specific periods. There is some flexibility but be sure that the acct is rolled into a beneficiary acct - or those options are void. There are different rules that apply to spouses, other individuals and n0n-individuals; and to whether the deceased had attained 70.5 age at time of death.

So my suggestion is to first read the relevant IRS publication (in this case 590), do additional googling, call or write a show like this, and call IRS to confirm your understanding - but then find a competent authority, such as CPA, to provide advice whenever significant capital and tax is at issue.

1. Great advice for Jennifer to have son use a vitual account for a while, and that penny stock investment is worst idea ever (there is insufficient info and the market too thin to get reliable results). Also would suggest giving several books - at least one on stock market and one on general financial literacy. When completes them and can answer questions then try giving some money to invest. Unfortunately it will be hard to find a no load mutual fund with a $100 min, and if buy a stock or ETF the commission fee will be high as % of amount invested. I also like the idea of kids taking a product they like (store, food, clothes or other brand) then do research on it to determine plus and minus of it as an investment. Finally, to reduce transaction cost, a parent could buy a stock in their acct but designate it with their child as theirs, then share any gain or loss.

Love your show. I wish it was required listening in schools.

You said that when a person received an Inherited IRA they had to wait until 59 1/2 to withdraw without penalty.
Unless the laws have changed recently that is incorrect. The government wants to receive their taxes. So they require you to take a minimum distribution based on life expectancy. As if you were 72, but using your current age for calculations. I had one from my father and this was the requirement.

With Generous Support From...