How much is the least amount you can put into an IRA per year?

[Guest Duchess Renea]

I am sixteen and will be seventeen in August. I would like to set up an IRA but I only work around 2 days a week, as part time. I was wondering if there is a minimum amount to put in each year (I know that you can put the maximum amount of $2000), and each month can you just add an amount? How does the whole system basically work?

[Michael Devault]

The Internal Revenue Code has no minimum amount, but product vendors might. You should select some potential vendor candidates and check with each to determine if they have a minimum contribution. If they do, you may want to set money aside until you have the minimum saved up, then make your contribution.

You're to be commended for wanting to establish an IRA at such an early age. Very few 17 year olds have the wisdom to save money. You're forward thinking will pay off for you in the future. Keep at it and best wishes to you.

[John G]

I agree with Michaels comments. It is not an IRS issue but a custodian limitation... like minimum balances in checking or savings accounts. There is a lot of variation between custodians so asking a few is a good idea.

A second way to solve this problem is to put your contribution into savings. Early next year you can combine your 2001 contribution with funds for 2002. Strong funds (www.estrong.com) have I believe a $250 minimum opening balance. Some custodians waive the opening minimum if you elect a monthly deposit.

Finally, you might want to talk with an uncle or grandparent and explain your IRA plans. You might find someone surprised by your early interest in investing who might match your contributions.

While you don't need to watch your IRA on a daily basis, you will learn a lot about investing if you read the quarterly or monthly statements and newsletter. Good luck.