There is no minimum amount for opening an account. Certain investments, such as mutual funds, require a minimum initial investment. If you're ready to take the next steps, find a brokerage agency that offers Roth IRAs and complete an account application. You may need to act as an account keeper until your child turns 18, as brokerage firms generally don't allow minors to open their own accounts.
At least one broker, Fidelity, has introduced a child-focused Roth IRA product to make the process as easy as possible for parents, but others are happy to also offer Roth IRA accounts for children. Your child can open a Roth IRA as long as they have earned income from work, regardless of their age. With a custodial Roth IRA, you can help your child start saving for retirement as soon as they start earning income. Because Roth IRA contributions are made with after-tax money and can be withdrawn at any time, these accounts are a great option for your child to be financially successful in the long term.
The main difference between traditional and Roth IRAs is when you pay taxes on the money you contribute to the plan. The IRA is opened in your child's name and you'll need to provide your Social Security number when you open the account. As long as your child earns money and pays taxes on them, they can contribute to a custodial Roth IRA. While you might see brokers touting a Roth IRA for children (like Fidelity Investments does), there's nothing special about the way a child's IRA works, at least when it comes to the IRS.
If you're familiar with how Roth IRAs work, then you already understand the basic rules of Roth IRAs with custody. Opening an IRA for your child not only gives them an advantage in saving for retirement, but also valuable financial lessons. In addition, at the time of retirement, the account owner must have had a Roth IRA open for at least 5 years, counting from the start of the first calendar year in which a Roth IRA was opened. For people who work for an employer, the compensation that is eligible to fund a Roth IRA includes salaries, salaries, commissions, bonuses, and other amounts paid to the person for the services they provide.
Minors generally can't open brokerage accounts in their name until they're 18, so a Roth IRA for children requires an adult to act as a custodian. One way to do this is to establish a Roth IRA with custody, or what Fidelity is known as a Roth IRA for children and, more generally, as a Roth IRA for minors. Children of any age can contribute to an IRA as long as they have earned income from a job, either from an employer (such as a newspaper or a lifeguard) or from a small business of their own. Since Roth IRAs can be invested in almost any type of asset, they are likely to perform much better than a savings bond or an old bank account.
In addition to helping them start saving for retirement, a Roth IRA can be a great way to teach them the basics of investing and help them save for emergencies or tax-advantaged college expenses.