[ad_1] The standard message from the financial community is that Americans are woefully unprepared for retirement. That owes to several factors, one of the major ones being a lack of regular retirement savings contributions. But there may be hope for America’s children, including yours. One of the most fundamental elements of investing success is starting early and giving your money a chance to grow through compounding earnings. You may be able to help your children do exactly that by opening a Roth IRA for kids. We all know how important it is to begin investing early in life. But imagine what your kids can do if they begin investing before they graduate from high school? It’s possible, and a Roth IRA can make it happen. Start by reading this article or researching the best places to open a Roth IRA. #ap9708-ww{padding-top:20px;position:relative;text-align:center;font-size:12px;font-family:Archivo, sans-serif}#ap9708-ww #ap9708-ww-indicator{text-align:right;color:#4a4a4a}#ap9708-ww #ap9708-ww-indicator-wrapper{display:inline-flex;align-items:center;justify-content:flex-end;margin-bottom:8px}#ap9708-ww #ap9708-ww-indicator-wrapper:hover #ap9708-ww-text{display:block}#ap9708-ww #ap9708-ww-indicator-wrapper:hover #ap9708-ww-label{display:none}#ap9708-ww #ap9708-ww-text{margin:auto 3px auto auto}#ap9708-ww #ap9708-ww-label{margin-left:4px;margin-right:3px}#ap9708-ww #ap9708-ww-icon{margin:auto;display:inline-block;width:16px;height:16px;min-width:16px;min-height:16px;cursor:pointer}#ap9708-ww #ap9708-ww-icon img{vertical-align:middle;width:16px;height:16px;min-width:16px;min-height:16px}#ap9708-ww #ap9708-ww-text-bottom{margin:5px}#ap9708-ww #ap9708-ww-text{display:none}#ap9708-ww #ap9708-ww-icon img{text-indent:-9999px;color:transparent} Ads by Money. We may be compensated if you click this ad.Ad #ap9708-w-map{max-width:600px;padding:20px 0 10px;margin:0 auto;text-align:center;font-family:”Lato”, Arial, Roboto, sans-serif}#ap9708-w-map #ap9708-w-map-title{color:#212529;font-size:18px;font-weight:700;line-height:27px}#ap9708-w-map #ap9708-w-map-subtitle{color:#9b9b9b;font-size:16px;font-style:italic;line-height:24px}#ap9708-w-map #ap9708-w-disclosure{margin-top:10px;font-size:12px;color:#9b9b9b}#ap9708-w-map #ap9708-w-map-map{max-width:98%;width:100%;height:0;padding-bottom:65%;margin-bottom:20px;position:relative}#ap9708-w-map #ap9708-w-map-map svg{position:absolute;left:0;top:0}#ap9708-w-map #ap9708-w-map-map svg path{fill:#e3efff;stroke:#9b9b9b;pointer-events:all;transition:fill 0.6s ease-in, stroke 0.6s ease-in, stroke-width 0.6s ease-in}#ap9708-w-map #ap9708-w-map-map svg path:hover{stroke:#1261C9;stroke-width:2px;stroke-linejoin:round;fill:#1261C9;cursor:pointer}#ap9708-w-map #ap9708-w-map-map svg g rect{fill:#e3efff;stroke:#9b9b9b;pointer-events:all;transition:fill 0.6s ease-in, stroke 0.6s ease-in, stroke-width 0.6s ease-in}#ap9708-w-map #ap9708-w-map-map svg g text{fill:#000;text-anchor:middle;font:10px Arial;transition:fill 0.6s ease-in}#ap9708-w-map #ap9708-w-map-map svg g .ap00646-w-map-state{display:none}#ap9708-w-map #ap9708-w-map-map svg g .ap00646-w-map-state rect{stroke:#1261C9;stroke-width:2px;stroke-linejoin:round;fill:#1261C9}#ap9708-w-map #ap9708-w-map-map svg g .ap00646-w-map-state text{fill:#fff;font:19px Arial;font-weight:bold}#ap9708-w-map #ap9708-w-map-map svg g:hover{cursor:pointer}#ap9708-w-map #ap9708-w-map-map svg g:hover rect{stroke:#1261C9;stroke-width:2px;stroke-linejoin:round;fill:#1261C9}#ap9708-w-map #ap9708-w-map-map svg g:hover text{fill:#fff}#ap9708-w-map #ap9708-w-map-map svg g:hover .ap00646-w-map-state{display:initial}#ap9708-w-map #ap9708-w-map-btn{padding:9px 41px;display:inline-block;color:#fff;font-size:16px;line-height:1.25;text-decoration:none;background-color:#1261c9;border-radius:2px}#ap9708-w-map #ap9708-w-map-btn:hover{color:#fff;background-color:#508fc9} The best time to open a Roth account for your Kids is today There's no time like the present to begin preparing for their future. Click on your state now to find out more. HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas Open an Account Today What is a Roth IRA? As the name implies, a Roth IRA is a variation of an individual retirement account. That means you can contribute a portion of your earned income to this account each year. And by doing so, you’ll be building an investment account dedicated primarily toward your retirement. But that said, Roth IRAs can serve other purposes as well, and that’s why they often make sense for children. This is also a good time to point out that a Roth IRA makes sense for you as a parent too. Because the investment income earned in a Roth IRA is tax-deferred—and eventually tax-free—there are no tax complications to worry about. Unlike taxable brokerage accounts and even bank accounts, there’s no possibility of incurring the so-called “kiddie tax” on the investment earnings in a Roth IRA account. How it works In many respects, a Roth IRA works the same as a traditional IRA. You’ll contribute money to the plan out of earned income, and those contributions can earn investment income on a tax-deferred basis. Funds can be withdrawn from either account beginning at age 59½ without incurring an early withdrawal penalty. And either plan can be invested in an investment account of your choice, including banks, brokerage accounts, robo-advisors, and fund families. But beyond those basics, Roth IRAs are different from traditional IRAs in the following ways: Contributions to a traditional IRA are generally tax-deductible in the year they are made; Roth IRA contributions are not tax-deductible. Because they are not tax-deductible, contributions made to a Roth IRA can be withdrawn early without incurring ordinary income tax or the 10% early withdrawal penalty. While distributions taken from a traditional IRA after age 59½ are subject to ordinary income tax, distributions made from a Roth IRA will be tax-free if the account has been in existence for at least five years. Traditional IRAs are subject to required minimum distributions (RMDs) beginning at age 72; Roth IRAs are not and can literally grow throughout your lifetime. Point #2 is particularly important when it comes to minor children. If funds are needed to pay for their education, contribution amounts can be withdrawn early without tax consequences. That gives Roth IRAs greater flexibility than traditional IRAs. #ap90600-ww{padding-top:20px;position:relative;text-align:center;font-size:12px;font-family:Archivo, sans-serif}#ap90600-ww #ap90600-ww-indicator{text-align:right;color:#4a4a4a}#ap90600-ww #ap90600-ww-indicator-wrapper{display:inline-flex;align-items:center;justify-content:flex-end;margin-bottom:8px}#ap90600-ww #ap90600-ww-indicator-wrapper:hover #ap90600-ww-text{display:block}#ap90600-ww #ap90600-ww-indicator-wrapper:hover #ap90600-ww-label{display:none}#ap90600-ww #ap90600-ww-text{margin:auto 3px auto auto}#ap90600-ww #ap90600-ww-label{margin-left:4px;margin-right:3px}#ap90600-ww #ap90600-ww-icon{margin:auto;display:inline-block;width:16px;height:16px;min-width:16px;min-height:16px;cursor:pointer}#ap90600-ww #ap90600-ww-icon img{vertical-align:middle;width:16px;height:16px;min-width:16px;min-height:16px}#ap90600-ww #ap90600-ww-text-bottom{margin:5px}#ap90600-ww #ap90600-ww-text{display:none}#ap90600-ww #ap90600-ww-icon img{text-indent:-9999px;color:transparent} Ads by Money. We may be compensated if you click this ad.Ad #ap90600-w-text{padding:20px 0 10px;margin:0 auto;text-align:center;font-family:”Lato”, Arial, Roboto, sans-serif}#ap90600-w-text #ap90600-w-text-title{color:#212529;font-size:20px;font-weight:700;line-height:30px}#ap90600-w-text #ap90600-w-text-subtitle{color:#9b9b9b;font-size:16px;font-style:italic;line-height:24px}#ap90600-w-text #ap90600-w-disclosure{color:#9b9b9b;margin-top:10px;font-size:12px}#ap90600-w-text #ap90600-w-text-btn{margin-top:25px;padding:9px 13px;display:inline-block;color:#fff;font-size:16px;line-height:20px;text-decoration:none;background-color:#1261c9;border-radius:2px}#ap90600-w-text #ap90600-w-text-btn:hover{color:#fff;background-color:#508fc9} Make your kids' retirement plan work by investing in a Roth IRA Roth IRAs allow you to save money for their retirement, while providing the flexibility that traditional retirement plans lack. Click below to learn more. Get Started Roth IRA Contributions As is the case with traditional IRAs, the maximum annual contribution that can be made to a Roth IRA is $6,000. That’s the maximum contribution that can be made (unless you are 50 or older, in which case the maximum is $7,000), but your child can make a smaller contribution. Remember we said contributions to a Roth IRA are limited to earned income only? That means your child will only be able to contribute from their earned income. If that’s $3,000, that’s fine, and so is $1,000, or even $500. It isn’t necessary for your child to make the maximum contribution. The primary purpose is to help your child begin saving money for the long term now. That can be accomplished with a few thousand dollars, or with just a few hundred. Roth IRA Limits Once again, we must emphasize that contributions are limited to your child’s earned income. That does not include interest, dividends, gifts, or other sources of income that are unearned. Contributions can be made up to the amount your child earns from paid work. The best example is a job that reports his or her income on a W-2 each year. That may come from part-time work or even seasonal employment, like summertime and holiday breaks from school. But that’s not always the case with minor children. They often earn money from casual work, like babysitting and lawn cutting. If that’s the case, you’ll need