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Why a Custodial Roth IRA isn’t always the best first step—and how to best save for a newborn instead.
It’s never too early to start thinking about your child’s financial future, even after they’ve only just arrived. Naturally, that leads to questions about investing as early as possible. If you’ve done any Googling, you might have heard about Custodial Roth IRAs, and that might have led you to wonder: Can I open one for my newborn?
The answer is a little more nuanced than a simple yes or no. While there’s no minimum age requirement to open a Custodial Roth IRA, there’s one rule of the account that prevents most parents from opening one: your child must have earned income. Since most newborns aren’t earning a paycheck (as adorable as they are), opening a Custodial Roth IRA is an option for most families in the early years of a child’s life.
That said, there are rare exceptions, but more importantly, there are several other practical ways to start saving for your baby right now. In this guide, we’ll break down when opening this type of account for a newborn is possible—but also the best Custodial Roth IRA alternatives when it isn’t.
English (US)