Opening a Retirement Savings Plan for Your Adult Child: The Overlooked Tax Optimization
Since the elimination in 2024 of the possibility to open a Retirement Savings Plan (PER) in a child's name, many parents have believed that the door was permanently closed. That’s not true: once a young adult turns 18, they can open their own Retirement Savings Plan — and parents have every incentive to assist them, especially if they are still part of the household for tax purposes. With benefits like tax deductions, building a future down payment for a home, and getting an early start on retirement capital, this often overlooked tool is one of the most powerful strategies to activate before December 31.
An Underutilized Tax Lever: The Deduction for Dependent Young Adults
Many taxpayers are unaware: when a child reaches adulthood but remains attached to the family tax household, they have their own PER deduction limit, separate from that of their parents. In 2025, this limit amounts to €4,637 per year, plus any unused limits from the past three years. As long as the young adult does not work, has no income, or does not use this allocation, the limit remains completely available.
Patrick Prugnaud, a wealth management engineer at La Financière d'Uzès, highlights an essential point: if parents help their child contribute to their PER, they can deduct these contributions from their own income, using the child's unused limit. This is a perfectly legal mechanism, often overlooked, yet highly effective for reducing income tax.
In other words, within the same tax household, two deduction limits coexist: one for the parents and one for the young adult. A family that has not used previous allocations can thus generate a significant overall deduction.
The second, less well-known advantage relates to withdrawal taxation. Generally, the PER is locked until retirement, but a major exception exists: the acquisition of a primary residence. Therefore, the young adult can withdraw their capital at any time to purchase their first home. This makes the operation doubly beneficial: tax optimization for the parents today, and building a real estate down payment for the child tomorrow.
This mechanism also offers a long-term financial advantage: making contributions early allows for the smoothing of savings efforts and fully exploits compounding. By starting at age 18 or 19, a young adult can implement a target-date fund strategy—more risky initially, more secure later—and build a substantial retirement capital without excessive effort.
An Educational and Transferable Tool: Family Donations, Financial Education, and Long-term Capitalization
On a practical level, the adult child must open the Individual Retirement Plan (PER) themselves, as no proxy subscription is permitted. However, parents or grandparents can assist. Legally, every 15 years, a family gift exemption of up to €31,865 is allowed, provided it is made by a parent or grandparent under the age of 80. This amount can be used to fund a PER.
This wealth management strategy presents three complementary advantages.
First, it enhances the intergenerational organization of savings. Parents can optimize their taxes while transferring a sum intended for building their child’s wealth without any tax burden. From a life cycle planning perspective—such as education, buying a first home, or setting up a household—the PER becomes a fundamental tool.
Secondly, the approach has an educational benefit. Opening a PER at 18 instills the habit of long-term savings from the onset of adulthood. The young investor quickly learns about the mechanisms of compounding, managed investment strategies, risk modulation, and time-based decision-making. Over the long term, these habits greatly influence financial health.
Finally, this strategy fits well with the current fiscal environment. With increasing taxes, declining risk-free returns, and ongoing uncertainty about retirement systems, tax-advantaged savings plans are becoming essential. Helping an adult child contribute to their PER is one of the few optimizations that combines no risk, does not diminish family wealth, and offers a tangible tax impact the following year.
In summary, this approach encourages families to smartly balance between immediate optimization and future transfer. This balance has become valuable in an environment where every tax advantage counts and where retirement planning is starting earlier and earlier.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
