Permalink Submitted by Alan Spross on Thu, 2008-02-21 20:08
There is none.
But the child must be capable of providing a service for which a fair market value is paid. Some very young child actors have had extensive income. More typically, a child can be paid for doing household chores, baby sitting, mowing lawns etc and this qualifies as taxable compensation to make a Roth contribution. That said, some IRA custodians will not open an IRA for a minor so it may take awhile to find a willing custodian.
The IRS has not been active in questioning these contributions, but it is a good idea to keep a record of the child’s hours of work and hourly rate just in case.
Permalink Submitted by Alan Spross on Thu, 2008-02-21 20:08
There is none.
But the child must be capable of providing a service for which a fair market value is paid. Some very young child actors have had extensive income. More typically, a child can be paid for doing household chores, baby sitting, mowing lawns etc and this qualifies as taxable compensation to make a Roth contribution. That said, some IRA custodians will not open an IRA for a minor so it may take awhile to find a willing custodian.
The IRS has not been active in questioning these contributions, but it is a good idea to keep a record of the child’s hours of work and hourly rate just in case.