Custodial ROTH for a sibling w/o earned income

[Guest asia280]

I would like to establish a custodial ROTH for my sister. She is 25, but has no current earned income because she is in medical school. I thought I read somewhere that after a certain age, you may contribute to a ROTH without having earned income. Any assistance would be greatly appreciated - thanks!

[JAMES PATRICK]

To contribute to a Roth IRA you MUST have taxable compensation.

What you may have read somewhere is that you can contribute to a Roth after you are 70.5 years which you cannot do for a traditional IRA. But that individual would also have to have taxable compensation.

[John G]

Above response is correct. IRA holder (Roth or otherwise) must have taxable income... with just one exception I know of that involves a non-working spouse. I don't think your circumstances falls into that catagory.

However, all kinds of income can help like babysitting, newspaper routes, etc. Some small businesses employ their kids to get them the income to fund their Roths each year.

As soon as your sister has earned income (or even at the begining of a year when you think she will have earned income) you can fund her Roth. Since it falls way short of the "gift" threshold of 10k, you will have no problem.