Child Roth IRA

• Literacy: We hear about child literacy and the new "No Child Left Behind" program which is an important step. But, has anyone considered the drawback on the advanced students, those left waiting for the extra instruction to be completed, so we... "can please move on to the next topic"?
• Fitness: We hear a lot about the importance of fitness for our children yet "No Child Left Behind" resulted in eliminating many school physical education classes. (You can sign the Fitness Integrated with Teaching (FIT) Kids Act to require gym and recess classes back in schools.)
• Have you heard about taking care of the children financially? Oh, yes, I almost forgot -- you have! Remember? "If you want your child to go to (fill in some nice prestigious college name here), you need to begin saving at birth (fill in some nice big dollar amount here) every month!"

Instead of just paying every time they say, Mom Can You Buy Me This or handing out an allowance, let's start Raising Financially Fit Kids. We help our children with literacy so why not help them with financial literacy as well? There are several books and games to help Teach Kid Money Management. Children become genuinely interested when learning is fun and challenging.

Once you have begun to teach about money, it is time to focus on compound earnings and how to handle them. It is not enough anymore to just teach compound interest. With many investment options, we must teach children the value of tax free compound earnings, tax free wealth.

The Kids Roth IRA Handbook gives guidance on how to start a Child Roth IRA (Individual Retirement Account) from the very first paycheck. Roth IRAs grow tax free and because there is no age limit to contribute to a Child Roth IRA, any minor child from birth to 18 can contribute. A Child Roth IRA can be set up as long as the child has actual "earned income".

Let's pause there and ask how little Jenny Jones, age 2, could possibly have "earned income" to qualify for a Child Roth IRA? Well if she is in movies, TV ads etc., she might have "earned income". It is more typical that your child might start working around age 14 (in accordance with federal and state child labor laws), but they can and do work at younger ages, and any "earned income" will count for establishing a Child Roth IRA.

The Kids Roth IRA Handbook shows some great examples of how children are working at younger ages in accordance with the law. If you just stop a moment and think, you are aware of some minor children working.

You know there are young rising entrepreneurs who are minors around the country and you also know about your local babysitter, paper boy, dog walker, the famous lemonade stand, and more. There are exceptions to the child labor law and once familiar with these, parents can easily see many opportunities for child "earned income." Details are found in the book with references to make it easy to keep up to date on Child Roth IRA laws. In any tax book or internet article, you will always want to go to the IRS source to verify what is current law is. This book consolidates all the references, thus saving parents hours of research time. But, let's move along.

In the case of minors, their parents will have to actually open the Child Roth IRA as custodial parents. Little Jenny Jones who modeled for Uncle John's new book cover is not old enough to sign on the dotted line for her Child Roth IRA. Many banks, brokerage companies and mutual fund companies will be more than happy to assist you with the details to open up the Child Roth IRA.

The Roth IRA is best for children with lower incomes (assuming they are not a child Hollywood Star) because they probably will owe no taxes, or at least very little taxes. There is no reason to choose a Traditional IRA as this type defers the taxes which means your child will have to pay taxes on the earned income later.

Now, when you open this IRA for your minor child, don't forget to continue with your child's financial understanding of a Child Roth IRA, so at 18 years, they don't decide a Corvette sounds alot better than that nursing home you said they need to pay for 50 years from now.

Simply put, you need to teach "HANDS OFF THE ROTH!" which should not be a problem if you have taught them well. If you have taught them well, they will have spending money, understand good and bad debt, understand not to carry a credit card balance, and whatever ellse you deemed a "great rule of finance." Of course the money will belong to your minor child and all rules apply as in any other Roth IRA situation. Remember there was no age limit, so rules for adults are the same rules for your minor child.