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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]You could open a UTMA for them.  They are more flexible than a 529 plan.  Depending on where you live, you can manage and control the UTMA until they are 18 or 21.  And the first $1300 of annual income in the account is tax-free.

If they are teens and work, you could put it into a Roth IRA for them for up to the amount they earned in a tax year (with a cap of $7k per year) - then they get tax free growth plus it is eventually withdrawn tax-free.  I have a few friends who do this - they let the kids spend what they earn, but they make a Roth IRA contribution for them up to their earnings or $7k, whichever is lower.   [/quote]

OP here. I thought about an IRA but they don't have jobs (they are 12 and 14). DH owns his own business and I read something about "hiring" the kids but I don't know that there is much we could realistically say they are doing an employees. [/quote]

Hang on to the money for a few years (you can buy a CD or something) and [b]when they get W2 jobs,[/b] match whatever they earn into Roth IRAs (up to the annual limit).[/quote]

You don't need W2 job to put money in their ROTH as long as they have earned income (like babysitting, dog walking...etc). You just need to document how your kid earned the money in case IRS asks[/quote]

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