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Started by Irish247, September 27, 2018, 04:22:17 PM
Quote from: Sam on October 01, 2018, 07:55:22 AMThanks for addressing this topic. I haven't focused on IRAs at all as I wasn't allowed to start one after I realized what they were a year after working.Can you guys share some of the details regarding what is the max IRA contribution for children? Same as adults? How do decide how much to compensate them and make them feel motivated if you're funding their untouchable IRA? Why not 401(k) for your kids for more contribution?Finally, is it worth contributing to a child IRA if they don't earn enough to pay income taxes?Thx
QuoteSo, if a child earned money during the tax year, you or your child can contribute as much as he or she made, up to the annual limit, which is currently $5,500. But the tricky part about IRAs for minors is that their earned income must be documented.That means you can't fund an IRA for an infant or toddler who can't legitimately earn income. You can't pay an 8-year-old a cash allowance for household chores and call it income for the purposes of an IRA without proper documentation. Additionally, you can't pay kids an outrageous rate, like giving your teen $1,000 to wash your car, and then put it in an IRA.