Children of any age can contribute to an IRA as long as they have earned income from a job. Age 18 (or 21 in some states)
An IRA account for your child is very similar to, but not exactly the same as, a custodial account. That is, you control the account until your child reaches the age of majority -- just as you would with a custodial account -- but the IRA account is not actually considered to be a type of custodial account. However, when you withdraw the money from a Roth IRA, it isn't taxed. That's right -- you get off scot-free with the booty. All you have to do is to wait until you can withdraw it penalty-free. Again, that's after age 59 1/2, and as long as it's been in there for at least five years. The tax breaks for a Roth IRA are different. Again, you can put in up to $2,000 a year. But the money isn't tax-deductible. Taking the above example, you'd still be taxed on $30,000 even though you had put the same $2,000 into a Roth IRA. However, when you withdraw the money from a Roth IRA, it isn't taxed. That's right -- you get off scot-free with the booty. All you have to do is to wait until you can withdraw it penalty-free. Again, that's after age 59 1/2, and as long as it's been in there for at least five years. Children of any age can contribute to an IRA as long as they have earned income from a job, be it babysitting, yard work or walking neighborhood dogs. For 2013, the maximum your child can contribute to an IRA (either traditional or Roth) is the lesser of $5,500 or his or her taxable earnings for the year. As the custodian, you (the adult) control the assets in the custodial IRA until your child reaches age 18 (or 21 in some states), at which point the assets are turned over to him or her. The IRA is opened in your child’s name, and you will have to provide his or her social security number when you open the account. Yours is one of the most common questions I get regarding Roth IRAs for kids. So it's worth emphasizing that in order to open a Roth the critical factor is earnings: A child can have a Roth IRA as long as he or she has earned income from a job. Birthday gifts from grandparents or interest on a savings account don't count, nor does an allowance for doing general household chores. I read in Kiplinger's magazine that in 2008 kids can make a contribution to a Roth IRA of up to $5,000 or 100% of their earned income, whichever is less. The IRS has no restriction on the IRA age for minors. The only qualification is the child must have declared earned income. This can be from a television commercial using the child's likeness or even a lemonade stand or summer life guarding job. If a child has $3,000 in annual income, the IRA contribution can be up to that earned amount. You can continue to contribution to an IRA in any year as long as you have the income to equal the contribution. As of 2011, if you are over the age of 50, your maximum contribution is $6,000. Another benefit of IRAs is that your child may be able to tap into the account for qualified higher education expenses and up to $10,000 towards a down payment on a first home without penalty. With a Roth IRA, you can withdraw any contributions, but not the investment earnings, for any reason without tax or penalty. As the custodian, you (the adult) control the assets in the custodial IRA until your child reaches age 18 (or 21 in some states), at which point the assets are turned over to him or her. The IRA is opened in your child’s name, and you will have to provide his or her social security number when you open the account. The Education IRA is in a category all its own. You could have a traditional IRA as well as a Roth IRA, but you could only invest a total of $2,000 yearly into both of them. The $500 maximum that you could invest yearly in an Education IRA is in addition to that $2,000. However, when you withdraw the money from a Roth IRA, it isn't taxed. That's right -- you get off scot-free with the booty. All you have to do is to wait until you can withdraw it penalty-free. Again, that's after age 59 1/2, and as long as it's been in there for at least five years. Yes, your daughter has until April 15 to contribute to a Roth IRA for 2007. But she can contribute only the amount of her earnings -- in this case, $1,500. If she has already spent the money, or if she's saving it for college or some other goal, you can come up with the cash to fund the account. I read in Kiplinger's magazine that in 2008 kids can make a contribution to a Roth IRA of up to $5,000 or 100% of their earned income, whichever is less. You must have the account for at least five years and be 59 1/2 years old to take qualified withdrawals of the interest portion of your Roth IRA. You'll pay ordinary income taxes and a 10-percent tax penalty on non-qualified withdrawals. Funding a New IRA. Your adult child can use the money you give her from your IRA withdrawal to fund her own IRA up to the limits prescribed by law, provided she has earned income for the year that is equal to the amount of your gift. You can't transfer, or roll over, assets from your IRA into an IRA for your child.
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how old must a child be to have a simple ira account