Dear Liz: I have my homeowners and auto insurance with the auto club. For the past few years, I have called them about their $59 yearly membership fee. I advised them that I did not need any of their services, as my last three new cars have their own roadside service. I was shocked to find out that if I do not pay the $59 membership fee, my home and auto insurance will be canceled.
How is this legal, and why must I buy something I do not need to be covered for home and auto insurance? Also, I cannot pay my home and auto insurance by credit card so I can get my points. Again, is this legal?
Answer: Yes and yes.
The answer to your first question is embedded in the phrase “membership fee.” The regional auto clubs that make up the American Automobile Assn. are mutual-benefit membership organizations created to provide products and services directly to their (wait for it) members.
In addition to roadside assistance and insurance, clubs typically offer travel planning, DMV services such as vehicle registration renewals, proprietary financial products and discounts on hotels, theme parks and movie tickets.
If you don’t want any of those things, then you don’t have to be a member. If you want access to your club’s insurance coverage, though, you’ll need to pony up.
As to your second question, businesses and organizations in the U.S. are typically free to determine which payment methods they’ll accept. If they don’t want to take credit cards, they don’t have to.
Dear Liz: Where can I open a Roth IRA for my minor grandchildren?
Answer: Fidelity, Charles Schwab and Vanguard are among the large brokerages that offer custodial IRAs with no account minimums or fees.
Getting your grandkids started with saving for retirement is a great idea, but they’ll need to be earning their own money before you can contribute to an IRA or a Roth IRA for them. You can match whatever taxable income they receive from a job or self-employment up to the annual contribution limit, which is $7,500 in 2026. You’ll want to keep copies of the tax returns showing their income in case you’re ever audited.
If the minor doesn’t have taxable income, you could consider contributing to a Trump account. That requires filling out IRS Form 4547, but only certain people in a certain order are allowed to fill out the form. For example, if the children have a legal guardian, that person fills out the form. If there’s no legal guardian but the child has a parent, the parent fills out the form. If there is no parent, an adult sibling can fill out the form. Only if there is no legal guardian, parent, or adult sibling is a grandparent allowed to fill out the form. Once the account is established, up to $5,000 per year per child can be contributed.
That’s only the start of the many complicated requirements surrounding these accounts, so seek a tax pro’s advice before proceeding.
Keep in mind that with Trump accounts, the money is turned over to the child at 18, while custodial accounts must be turned over by the age of majority (typically either age 18 or 21, depending on the state). If you want to maintain control of the money for longer, consider funding a 529 college savings account. The contribution limits are much higher, the money is tax-free when used for qualified education expenses, and up to $35,000 can eventually be rolled over to a Roth IRA.
Dear Liz: If someone is currently receiving Social Security disability payments, does the monthly dollar benefit change when they reach age 62 or at full retirement age?
Answer: Social Security disability payments convert to a retirement benefit when the recipient reaches their full retirement age, which is currently 67. The dollar amount doesn’t change, although recipients continue to get cost-of-living adjustments.
Got a question about money? You can submit it here.
Liz Weston, Certified Financial Planner, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
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