Is It Beneficial to Open a Roth IRA for Your Kids in 2024?

How a custodial Roth IRA works

A Roth IRA is a tax-advantaged account that comes with many benefits, such as tax-free income during retirement and the ability to withdraw funds for college expenses without penalties.

Make sure your child qualifies

• Your child must have earned income in order for you to contribute to a custodial IRA on their behalf.
• A kid can earn money Mowing lawns, Shoveling snow, Babysitting, Dog walking, Modeling, Bagging groceries, Acting, Tutoring, Assisting with social media management, Working in retail.

A few items to consider

• Your child's income must be below a certain threshold to contribute to a Roth IRA.
• You can contribute up to 100% of your child's earned income to the Roth IRA, with a maximum limit of $7,000 for 2024.
• Withdrawals from the Roth IRA during college could impact your child's eligibility for financial aid.

Introducing your child to saving and investing can set them up for a prosperous financial future. A Roth IRA can help them become financially independent and work towards building wealth over time.