IRA for kids

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Kids learn many lessons from summer jobs, and Fidelity wants to make saving one of them. To that end, it introduced the Roth IRA for Kids in January 2016.

Although anyone who has taxable earnings can open a Roth individual retirement account (IRA), our experience and research indicates that financial-services companies aren’t equipped to deal with minors who open IRAs.

However, Fidelity says it changed the paperwork and simplified the enrollment process for its Roth IRA for Kids. Otherwise, it’s similar to other Roth IRAs: The money grows tax-free, and you invest in stocks, bonds and bank certificates of deposit. The child owns the account, but an adult custodian makes the investment decisions and receives all statements and communications from Fidelity until the child reaches majority age. (The age varies by state.)

Anyone can fund the account, but the child must earn money from a job to participate. Annual contributions can be up to 100 percent of the child’s earnings or $5,500, whichever is less.