Did you know that you can set up an IRA for minors? Setting up an IRA for your child or grandchild can be a very effective way to teach children about the principles of savings, financial management, and retirement. That first car or new laptop might look attractive to a kid, but even small contributions to an IRA will pay off in the long run. The only requirement to make a contribution to an IRA is earned income, even if it’s earned from mowing lawns or babysitting. For 2013, your child can contribute the lesser of
- Her earned income for the year or
You can set up either a traditional IRA or a tax-free Roth IRA —both accounts have the same contribution limits. And because these earnings compound tax-free, the accumulation of wealth over the course of your child’s lifetime is substantial. Schedule a meeting with one of our Self Directed IRA experts for more details on setting up a self-directed IRA for your child.