Allowance, cash gifts, or investment income (dividends/interest).
If a teen earns $2,000 and wants to spend it on a car, parents can "match" that amount by contributing $2,000 of their own money into the teen's IRA (as long as the total doesn't exceed what the teen earned). solo teen ira
If the teen is self-employed (babysitting), keep a simple log of dates, jobs, and payments in case of an IRS audit. Fidelity, Charles Schwab, and Vanguard are popular choices
Fidelity, Charles Schwab, and Vanguard are popular choices with $0 account minimums. Traditional: Why Roth Wins A "Solo Teen IRA"
They can contribute 100% of their earnings up to the annual limit ($7,000 for 2024/2025). 💰 Roth vs. Traditional: Why Roth Wins
A "Solo Teen IRA" isn't a specific legal product name, but rather a strategy where a teenager with opens an Individual Retirement Account (IRA) . It is one of the most powerful wealth-building tools available due to the extraordinary power of time and compound interest. 🔑 The Golden Rule: Earned Income To contribute to any IRA, the teen must have earned income .
By starting just 10 years earlier, the teen ends up with the money at retirement. 🛠️ How to Set It Up