Articles: Not Too Young for a Roth IRA
If your teenager is working this summer, instead of him or her splurging on a new Xbox or iPhone, you might encourage a more practical purpose for some of the money: a Roth IRA.
There is no age restriction on Roth contributions if a child has "earned income" like wages. Contributions for 2014 are limited to the lesser of earned income or $5,500 (the same as in 2013).
Although tax-free distributions from a Roth IRA are generally not available until the child turns 59½, the contributions can grow into a sizable next egg. Also, tax-free withdrawals may be allowed due to disability or for a first-time home purchase (up to $10,000). Finally, your child will learn a valuable les- son about retirement saving.
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