Some young people will open individual retirement accounts (IRAs) when they start receiving paychecks from their first job. But actually, IRAs make excellent savings vehicles for people of an even younger age. Because of their tender years, and the decades they have before them, children are poised to take full advantage of time and the power of compounding within this type of tax-advantaged savings vehicle.
Your child, regardless of age, can contribute to an IRA provided they have earned income, defined by the IRS as “all the taxable income and wages you get from working…for someone who pays you or in a business you own.”
Below, we’ll take a look at two types of IRAs for children, the benefits these tax-advantaged investment vehicles offer, and how to open and make contributions to an IRA for kids.
Key Takeaways
- An IRA can help your child (or grandchild) save for…
