"A Roth IRA can only be funded by the earned income of the account owner. (That's real sweat-of-the-brow type earnings. Unearned income like dividends and capital gains don't count.) Unless your children are unusually talented, most of them won't have earned income in their elementary school years. Some kids do earn money through modeling, stuffing envelopes for mom's home business or the occasional patent, but allowances don't count unless the kid is really working for the money and if you try that one, you would want to check with a good tax advisor, and maybe a lawyer. I suspect Uncle Sam has already nipped that plan in the bud."

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