Can my 17 year-old-son have an IRA?

[Guest benzgyrl94]

My son is 17, working part time-would like to encourage him to start a Roth IRA-can he do it on his own or will he have to wait until age 18? He will not make more than $3000 this year, but will next year. Not sure how to get started with this but do want him to start a Roth as soon as he can. Any direction you can offer would be appreciated.

[John G]

Yes, he can get started. The money that funds the Roth can come from you, another relative or your son. He does not need over $3,000 to qualify, the $3k is just the max for anyone earning more. If you earn less, the max for that year is the amount of earned income. Note, dividends and interest are not part of earned income.

You may find that some custodians (like Etrade) do not want to open IRA accounts for minors. I believe Charles Schwab still does. You can look at brokerages, mutual funds and banks to be the custodian for your son's account.

I would recommend that your son's initial investment would be in a NO LOAD mutual fund. A broad based stock fund would be fine. An index fund usually has very low annual expenses and would give you broad diversification. NO LOAD means that there is no front end or back end fees charged.

If you need more information on the basics, post again.