Giving the Gift of an IRA this Season

BOSTON (TheStreet) -- Better than socks? That may depend on the attitude of the recipient, but as holiday season approaches, a unique gift may be to wrap up a retirement plan for someone you love.

Though 401(k)s are tied to a workplace, the self-directed nature of IRAs mean they can be bought and given to a recipient of your choosing as a present that, properly managed, really will keep on giving.

This holiday season consider a less traditional gift: An IRA, a gift that really keeps on giving.

A benefit, if you give an IRA to your spouse, is that it offers another outlet for household savings if your primary IRA is maxed out.

A Roth IRA may be an ideal way to go for the generous relative, as a traditional IRA will trigger taxes upon withdrawal.

When you open an account in someone else's name, most banks and brokerage firms can handle all the details and paperwork. The cost -- often as low as $200 to $500 -- can vary depending on the amount of additional services or guidance you want.

Along with choosing a facilitator, you must make sure the recipient is eligible for a Roth. To start with, they must have a modified adjusted gross income of less than $120,000, as per IRS regulations (married couples, filing jointly, have a higher limit, $176,000). Establishing a Roth in someone else's name also requires that neither the initial seed money nor annual contributions you may offer can exceed the recipient's annual income. That may not be too difficult, given that for anyone under the age of 50, annual contributions -- from any and all sources -- must be $5,000 or less. Older Roth investors are allowed a higher contribution limit of $6,000.