The IRS doesn't require a minimum amount to open an IRA. If you're a do-it-yourself investor, choose a brokerage agency. You can open a Roth IRA in an online broker and then choose your own investments. This may be simpler than you think: you can create a diversified portfolio with just three or four mutual funds that are in different asset classes.
When comparing brokers, look at the trading fees and investment fees of their offered funds (also called spend ratios). If you're looking for last-minute tax savings this year, you'll want to make sure you select the right IRA, the traditional IRA. Moving your funds from a 401 (k) from a former employer to a Roth IRA is a reasonably simple two-step process, and most 401 (k) and IRA providers are well-equipped to handle it. While you might see brokers touting a Roth IRA for children (like Fidelity Investments does) or something like that, there's nothing special about the way a child's IRA works, at least as far as the IRS is concerned.
While a tax exemption for this year is a great incentive to make your contribution to the IRA, the real value of the IRA is its ability to protect your investments from taxes. TRADITIONAL IRA You'll pay ordinary income tax on withdrawals of all traditional IRA earnings and on any contributions you originally deducted from your taxes. When choosing an IRA to start saving for retirement, you'll most likely decide between a traditional IRA or a Roth IRA. If your income exceeds those limits, the Roth backdoor IRA strategy allows you to open a Roth by converting money from a traditional IRA.
In general, the Roth IRA is the IRA of choice for children with limited incomes now, as it is recommended for those who are likely to be in a higher tax bracket in the future. Next, we'll look at two types of IRAs for children, the benefits offered by these tax-advantaged investment vehicles, and how to open and contribute to an IRA for children.