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Christopher R. Hibbard, ChFC®, CRPC®, CFS®
Vice President, Wealth Management
Teachers Investment Services
Located at Teachers Federal Credit Union
5439 Sunrise Highway
Holbrook, NY 11741
Phone: 631-698-7000 Ext. 6020
Email: christopher.hibbard@lpl.com
CRPC conferred by College for Financial Planning.
January/February 2025
A Roth IRA For Your Child
You might think individual retirement accounts (IRAs) are only for adults, but a Roth IRA can be a smart way to give your child a head start in building wealth.
Let's Talk Basics
Current tax law allows earnings on Roth IRA investments to potentially grow tax-free and can thus be withdrawn at age 59-1/2 or older with no tax consequences or penalties. Unlike other retirement accounts, a Roth IRA allows contributions (but not earnings) to be withdrawn penalty-free at any time. This can be incredibly valuable when funding future education or a first home purchase.Logistics
As a parent, grandparent, or legal guardian, you can open a custodial Roth IRA on behalf of a child and manage the account until the child reaches the age of majority (generally 18). If you wish, you can also make the annual contributions on the child's behalf, up to certain limits, leaving the child's earned income with them.You may invest as much as the Roth IRA annual contribution limit or the child's earned income for the year if less. Thanks to the annual gift tax exclusion, which is $19,000 for 2025, your gift contributions should be gift—and estate-tax-free. These amounts change annually.
A Teaching Tool
Opening a Roth IRA for your child is also a powerful way to teach them the importance of investing and saving for the future. By involving them in the process and explaining how their contributions can grow over time, you're instilling valuable financial literacy skills that will serve them well in adulthood. It's an opportunity to start a conversation about long-term financial planning and set them on the path to financial independence from an early age.If you're thinking about ways to invest in your child's future, consider talking with your trusted financial professional about the power of a Roth IRA. It's an investment that can truly make a difference.
A child's earned income for Roth IRA contributions can come from regular wages or self-employment, such as lawnmowing, babysitting, or even a lemonade stand.
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Christopher Hibbard is a financial advisor with, and securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Teachers Federal Credit Union (TFCU) and Teachers Investment Services are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Teachers Investment Services, and may also be employees of TFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of, TFCU or Teachers Investment Services. Securities and insurance offered through LPL or its affiliates are:
The sender and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
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