Minor Roth IRA
Client would like to set up a Minor Roth IRA for a child that recently started working. Child is 12 years old.
What are the considerations for this account? Are the parents able to make contributions on the child’s behalf, up to the amount of earned income the child has for the year? At what age does the account becoming individually owned by the child?
Permalink Submitted by Alan - IRA critic on Mon, 2024-01-29 19:17
Some custodians will not accept such IRAs for minors, but there are plenty that do. The account will be setup with you as custodian for the minor, and you can make the contributions if minor has earned income. Household chores done at home do not qualify because payments to the child are not treated as taxable comp. Child will acquire fullauthority over the account when they reach the age of majority in your state.
Permalink Submitted by Matthew Ottusch on Mon, 2024-01-29 19:34
Thank you. So for example, if the child earns $3k in a year (non-housechores income), the parents can contribute $3k to the Roth on his/her behalf?
Permalink Submitted by Alan - IRA critic on Mon, 2024-01-29 20:18
Yes, if the Roth is opened at a custodian who will accept contributions for minors.
Permalink Submitted by gautam shah on Fri, 2024-02-02 11:53
can grandparent set up ROTH IRA if child earned income from baby sitting for aunt”s kid? how to document properly for tax purpose and does that income need to be reported in tax form.can parent be named guardian of account
Permalink Submitted by William Tuttle on Fri, 2024-02-02 23:55