The Wall Street Journal has an interesting article on why a parent or a grand parent would want to contribute to a child’s retirement plan right after they got out of college.  This is a technique not often mentioned that has a fair amount of merit.

Using IRA’s, Roth IRA’s and 401K accounts can maximize the contributions early which grow to a large amount at retirement since they were contributed early.  It helps your child get a head start on a financially secure retirement.

From a practical perspective, you would gift your child and amount equal or less than the current gift amount of $14,000 and it would go right into the retirement account.  The growth of the funds can be almost 40 times the original contribution over 50  years.