Can a parent contribute to a child's traditional ira?

IRA contributions as gifts to children However, they must not exceed the annual contribution limit per year or the child's work income, whichever is less. The funds deposited in the IRA do not have to be the child's own funds. They can come directly from you, as long as that child has earned income. To put it another way, yes.

Many parents and grandparents contribute to IRAs on behalf of a minor. There is no requirement that the funds contributed to a minor's IRA have to be their “own money”. The minor only needs to have eligible compensation sufficient to support the contribution. This vehicle, basically like an IRA but with a different twist, isn't always on the menu, so you'll have to ask your provider if they have a child IRA (which they can call a “minor IRA” or “custodial IRA”).

If a parent or guardian jointly signs the IRA documents, including proof of receipt of the disclosure statement, the adult's signature must appear clearly on each of the forms of the IRA opening document. Once you've given the money to your child, they can only put it in their IRA if they're eligible to make an IRA contribution. On the other hand, the Roth IRA can be a wise choice from a tax point of view, since Roth IRA contributions are distributed before any gains and are always exempt from taxes or penalties. In all likelihood, having a low income and not participating in an employer-sponsored retirement plan would probably be eligible to make contributions to the Roth IRA or tax-deductible contributions to the traditional IRA.