Roth IRA - For Your Kids
As long as your child earns income, you can contribute to a Roth IRA on their behalf. (The only qualification is the child cannot contribute more to the account than they earned by working a job.) The money contributed does not have to be theirs; you can make the contribution a gift. For example, if you give your 16 year-old $2,000 to fund a Roth IRA, and the account grows at an average of 8%, the $2,000 will be worth over $90,000 by the time he or she is ready to retire. And since it’s a Roth IRA and not a traditional IRA, while the contribution was made with after-tax dollars, withdrawals are tax-free.