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No. of Recommendations: 7
Unless there has been some recent change in the law, your child does not need a W-2 to start a Roth IRA...your child only needs earned income. Earned income can be baby sitting, raking leaves, mowing the lawn, etc.


I heartily second this advice. My kids started their Roth IRA's when they were about 11 and had started doing regular pet-sitting for the neighbors.


If your child only made $250 in 2013, and will make $250 in 2014, some funds will let you start an IRA with as little as $500. I remember Heartland funds as being one of them. It was possible to start an IRA for $500 after Janauary 1st, with $250 being last years contribution, and $250 for the present year (2014 in this case).


We got around this by starting their Roth IRAs at our local credit union which did not have a minimum, as I recall. The kids just put the money into a basic savings account, and used the credit union as a place to collect their contributions until they did have enough for a mutual fund, and then they moved their funds over to one of the Vanguard funds.

And one more suggestion. When the kids were younger, they didn't mind putting 100% of their earnings into their Roth, but as they hit driving age, they needed money for expenses like car insurance, gas, and general teen-ager spending money. At the suggestion of another Fool, we matched their Roth contributions so that they were putting half of their earnings into their Roth IRA, and we funded the other half.

I love the idea of Roth IRAs for youngsters. They don't typically make enough money to pay any taxes, so their post-tax dollars are the same as their pre-tax dollars, but they get that nice tax-advantaged treatment at the end when it is virtually guaranteed that they will be in a higher tax bracket.
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