Roth IRA’S For Teenagers
Today parents and teenagers have access to one of the best investment opportunities around: the Roth IRA. You read that right, you no longer have to be an adult to contribute to a Roth IRA. All you have to do is have an earned income.
You may need your parents to help you out, by opening a custodial account. The only limitation for contributions, is that they can not exceed the maximum contribution amount for a Roth IRA for a given tax year. The contribution amount also can not be greater than the teen’s earned income.
The IRS does require proof of earned income to qualify for contributing to a Roth IRA. If you teen is working for an established company, they should receive a W-2 tax form at the end of the year showing how much money he or she has earned.
Let other family members know your teen has a Roth IRA. Family making contributions to your teen’s Roth IRA is a great gift idea. This way all of your teen’s money is not sent to the brokerage, they get to enjoy what they earn. Help your teen want to save, by matching any investment they make into their Roth IRA. This will help your teen learn to start saving money now.
If your teen makes money this summer mowing lawns or babysitting, and they invest the money in a Roth IRA account, and do not touch this money, they could have a very nice nest egg to start building on.