Q. My child has a part-time job. Can they open a Roth IRA?  Is it a good idea?


It’s a great idea for your child to open a Roth IRA!  The extra years that the money stays invested will help it grow significantly in value by the time they retire.

Keep in mind that all of the regular Roth IRA rules apply, so they will need to have earned income in order to contribute.  It can come from a part-time job for which they receive a W-2.  It could also come from “self employment” income like baby sitting, dog walking or cutting grass.  Your child will need to claim the income on their tax return in order to be eligible to contribute to a Roth IRA.

You could contribute to their Roth IRA – or match whatever they contribute – up to the greater of their earned income or the annual contribution limit of $5,500.  When my kids started their Roth IRA’s, my wife and I decided to match their contributions.  It helped incentivize them to think about their retirement when they were early teenagers!

Finally, I’d recommend investing the funds within their Roth IRA in a good, low-cost total stock market index fund.  Remember: time is on their side and over the long term, history has shown us that stocks have the best returns.  Skip the bond funds at their young age.


John is a CPA and personal finance coach.  Email your questions to john@60minutefinance.com.

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