The Complete Guide to Funding a Custodial Roth IRA

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Roth IRAs are amazing tax saving tools. Roth IRAs allow investors to grow their money tax-free. Even though there is no deduction for contributions, a Roth IRA provides the dual benefits of tax-free accumulation and tax-free distributions after age 59 1/2. The long-term benefits can be significant.

Funding your Roth IRA is usually one of the best financial decisions you can make. Roth funding puts your money where it will never be taxed again during your lifetime. Those benefits are just extended the younger you are.

You need earned income to fund your Roth IRA, but, although it is a little known fact, household work such as this does indeed qualify as earned income even if the employer is the child’s parents.

Here you can find our article series detailing how and why you should fund a custodial Roth IRA for your children.

Funding a 4-Year-Old’s Roth IRA
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My favorite part of my daughter’s Roth IRA is that she has earned it all. I have seen her work hard, learn valuable lessons, and truly earn her wage.

Roth IRAs, 529 Plans, and Financial Freedom (Megan Russell on FamVestor Podcast)
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On Monday, October 26, 2020, Megan Russell was interviewed by Sunny Burns and Sunmarie Burns of the FamVestor podcast.

Do Children Need To File A Tax Return To Fund Their Roth IRA? (2020)
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Don’t let stress about tax filing requirements keep you or your child from a powerful opportunity to provide for their future.

Q&A: Do I Need to File Schedule H for My Child’s Wages?
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I do not need to file Schedule H and imagine that most parent household employers also do not need to file this schedule.

Funding a 3-Year-Old’s Roth IRA
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My daughter was employed at her first job, earned her first income, and was able to fund her Roth IRA for the first time.

How to Fund Your Roth with Babysitting Money
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For domestic tasks like babysitting there are often two options: independent contractor or household employee. Taking the time to educate yourself on the difference may be worth your while.

Fund Your Child’s Roth with Chore Income
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There are many opportunities to pay your children. If that payment can be counted as earned income, then the child is eligible to fund their Roth IRA.

How to Open a Roth for Your Child
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Someone has to be proactive about your child’s retirement and every year you don’t open a retirement account is another year you’re holding back compound interest.

Follow Megan Russell:

Chief Operating Officer, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 700 financial articles. Her most popular post is "The Complete Guide to Your Washing Machine" while one of her favorites is "Funding a 3-Year-Old’s Roth IRA."

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