Can Minors and Seniors Have a Roth IRA?

A Roth IRA is one of the most flexible types of retirement accounts if you understand the rules. Does that mean that a Roth retirement account can work for both seniors and minors?

A Florida voicemail caller named Kathy says, “I’m 69 years old and still working. Can I start a Roth IRA? If so, are there any restrictions for starting at this late date?”

And a Money Girl podcast listener named Adrian V. has a question about using a Roth IRA much earlier in life. He says, “On your podcast, you mentioned the benefits of a Roth IRA. I want to open one for my 10-year old daughter. I understand that she must have earned income in order to qualify. She’ll be doing babysitting and dog walking and won’t earn more than $1,000 per year. How can I document her income to avoid any trouble with the IRS?”

Those are both fantastic questions. Let's take a look at what seniors and the parents of minors need to know about using a Roth retirement account the right way.

Roth IRA Rules for Seniors

Let’s review important information about traditional and Roth accounts that apply to anyone over age 70½, whether you’re still working or not.

Traditional retirement accounts allow you to skip paying tax on contributions and investment earnings until you take withdrawals in retirement. Roth accounts have the opposite taxation because you must pay tax up front on contributions. However, you can withdraw both contributions and earnings completely tax-free in retirement—as long as you’ve owned the account for at least five years.

With most retirement accounts, you must begin taking withdrawals by April 1 of the year after you reach age 70½. These are known as required minimum distributions (RMDs).

Once you start taking RMDs from a retirement account, you can no longer make any new contributions to it.

You don’t have to take any money out of a Roth IRA if you don’t want to. You can use it as an estate planning tool by passing it along to your heirs as a tax-free inheritance.

But with a Roth IRA, there are no RMDs. You don’t have to take any money out of a Roth IRA if you don’t want to. You can use it as an estate planning tool by passing it along to your heirs as a tax-free inheritance.

Plus, you can continue making contributions to a Roth IRA after reaching age 70½. For 2019, you can contribute up to $5,500 to either a traditional or a Roth IRA. If you’re over age 50, you can contribute up to $6,500. But as I mentioned, once you’re over age 70½ you can only...

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