Basic facts about Roth IRAs for children Children of any age can contribute to a Roth IRA, as well as a Gold IRA, as long as they have earned income from work. A parent or other adult will need to open a Roth IRA or Gold IRA account with custody of the child. Not all brokerage firms or online banks offer guarded IRAs, but both Fidelity and Charles Schwab do offer Gold IRAs. Traditional IRAs have no income limit on who can contribute. However, Roth IRAs limit who can contribute, based on their modified adjusted gross income.
A dependent will most likely have no problem with income limits. However, you can declare dependent children no matter how much they earn, as long as they don't pay more than 50 percent of their expenses. So, if your children have high incomes from employment, donations, or investments, their incomes may exceed annual limits. Convincing a child to hand over their hard-earned money to invest in a Roth IRA can be difficult, but remember that as long as the child has earned income from work to be able to receive Roth IRA contributions, it doesn't matter where the contributions come from.
In addition, when it's time to take advantage of your retirement age savings, certain eligible distributions from a Roth IRA will be tax-exempt, unlike distributions from a traditional IRA. In addition, at the time of retirement, the account owner must have had a Roth IRA open for at least 5 years, counting from the start of the first calendar year in which a Roth IRA was opened. This table shows if your contribution to a Roth IRA is affected by the amount of your modified AGI as calculated for the Roth IRA. As long as they have sufficient compensation to justify the IRA contribution, the IRS doesn't care where the money going to the IRA comes from.
While Roth IRAs have no age limit, traditional IRAs limit how old you can be and still contribute, regardless of whether you are declared a dependent or not. One way to do this is to establish a Roth IRA with custody, or what Fidelity is known as a Roth IRA for children and, more generally, as a Roth IRA for minors.