Can I Open an IRA or a Roth IRA for My Child?
Our children want many things. Love. Security. Comfort. Toys. Clothes. A laptop. A car. A college education. Concert tickets. Their own room.
Did we not mention …. an IRA? Really, a no-fee IRA for your child?
While your kids might not be too excited now, they almost certainly will when they’re older. Think about it, what a wonderful way to help your kids begin a lifetime of savings. And to watch that money, grow and grow over a long period of time.
If you were ever unsure if you can open an IRA for your children, the answer is yes. Your child must, however, have earned income to make contributions. You can choose to make contributions on your child’s behalf up to the amount of his or her income. Or better yet, you can also convince them to put away just a little of their own money and then match those contributions up to the annual contribution limit.
You may want to consider a Roth IRA, where contributions are made with after tax money. Since in all likelihood your children will never be in a lower tax bracket than they are now, you don’t have to worry about paying taxes upon withdrawal. Money in a Roth account can also be withdrawn tax-free and penalty-free before retirement, which means that it can be used to pay for college education down the road.
We’ve talked before about the many benefits of investing in an IRA in general, particularly when it comes to the magic of compounded interest working for you. It goes without saying then, but we will, that the younger you are when you start a no-fee IRA, the greater your savings will be over the years—more time for that magic to work longer and harder for you!
Invest in a no-fee IRA for your child today, what a wonderful gift to them. They may even appreciate it someday!
Go to our website to learn more about our no fee IRA accounts.
