Roth IRA for Kids
01.The Custodial Account
An IRA stands for Individual Retirement Account. A Roth IRA is a special retirement account where you pay taxes on the money you put in, but all the growth and future withdrawals are 100% tax-free! Did you know kids can have one too?
02.The Earned Income Rule
To open a Roth IRA, a kid must have earned income. This means they must earn money from a job—like modeling, acting, helping with a family business, or mowing lawns. Parents can open a Custodial Roth IRA and help the kid invest their earnings.
03.The Millionaire Kid Secret
If a 10-year-old puts $1,000 in a Roth IRA and lets it compound at 10% interest for 55 years until age 65, that single $1,000 will grow into almost $190,000! And because it's a Roth, they pay zero taxes on all that growth. That is the ultimate wealth builder!