IRA for Minors
$6,000, or 100% of compensation, whichever is less
16–19 year olds are employed in the US1
Eligible participants are under age 18 and must have earned income for the tax year in which a contribution is made
Earnings are tax-deferred, which may allow for assets to accumulate more quickly than in a taxable account
No annual IRA fees and no account minimums
Transaction fees, fund expenses, brokerage commissions, and service fees may apply
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Can an individual open an IRA for his or her child?
Yes. If the child is under age 18 and has earned income. The IRA for Minors account is opened by the minor's custodian (parent or legal guardian) who must sign the application. Additional requirements are the minor must be a U.S. citizen or resident with a valid U.S. address.
What are the eligibility requirements for IRA for Minors?
- Eligible participants are under age 18
- The minor must have earned income for the tax year in which a contribution is made
- A custodian (parent or legal guardian) establishes, trades, and maintains the account for the benefit of the minor. Only one custodian is allowed per account.
- The minor must be a US citizen or resident
- IRAs for Minors must be established by the tax filing deadline (without extensions) for the tax year to which the qualifying contribution(s) will apply. This date is generally April 15 of each year. IRA Notice 2020-18 Relief for Taxpayers extended the IRA contribution deadline from April 15 to July 15 2020. Applications postmarked by this date will be accepted.
How much can a child contribute to his or her IRA?
The current IRA contribution limit is 100% of earned income, or $6,000 in 2019 and in 2020, whichever is less.
Can a child deduct a Traditional IRA contribution?
Are there any fees for a child’s IRA?
There are no annual IRA fees and no account minimums for E*TRADE IRA accounts. Transaction fees, fund expenses, brokerage commissions, and service fees may apply.
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Tax-free withdrawals for qualified educational expenses, such as tuition and books.
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