Does it really make sense to start a retirement account for my child?

Opening a retirement fund for a child means opening a custodial IRA. Generally speaking, a custodial account is one that’s owned by an adult — a parent, grandparent, or legal guardian — on behalf of a minor.

Custodial IRAs are offered by many brokerages, so you’ll need to choose where to open yours. This could be the brokerage where you currently have your investment accounts or a different one.

Step 1: Choose a Brokerage

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On the application for a custodial IRA, the brokerage will typically ask for specific information.

Step 2: Complete the Application

Step 3: Choose an IRA Type

Should you choose a traditional or a Roth IRA for your child? Both offer tax benefits and both have the same annual contribution limits for kids. For minors, a Roth IRA typically works better.

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Once you’ve opened a retirement account for a child, you can fund the account using your linked bank account and then make your investment selections.

Step 4: Fund the Account and Choose Investments


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