Is It Beneficial to Open a Roth IRA for Your Kids in 2024?
Sunday, 12 May 2024, 07:30
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.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.