Why 'can my child have an IRA?' is a question worth asking:
The tax return filing date is fast approaching and that has people thinking about their Individual Retirement Accounts . “Did I contribute already?” “How much can I save?” “Should I do traditional or Roth?”
In fact, a “Child IRA” can yield unbelievable results. Let’s say you start contributing roughly $3 a day to a Child IRA from the moment a baby is born. That’s about $20 a week, $80 a month or $1,000 a year. You get the picture.Then you stop. And do nothing. Is there a catch? Well, yes. While nothing prohibits a child from establishing a Child IRA, a child needs a paycheck to offset an IRA contribution. “IRA rules say that to contribute to an Individual Retirement Account—at any age—you must have earned income, so you must have a job,” says Ben Feldmeyer, Private Wealth Advisor at the Feldmeyer Financial Group of Ameriprise Financial Services, Inc. in Dayton, Ohio.
Elementary school children can and do earn income . Still, most parents won’t see their kids earning the big bucks until they’re teenagers. And that’s all right.
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