How do I know if the child has earned income?
Calculating a child's earned income can sometimes be difficult, especially if they do not receive a W-2 or file a tax return. Table 1-1 of IRS publication 590-A is a great resource to help you understand the income requirements for Roth IRAs. Your tax advisor can also help determine how much the child is eligible to contribute.
What happens if a child receives a contribution, but they are not eligible?
If a child is not eligible to make a contribution, the custodian will need to complete a return of excess contribution form to remove the ineligible amount. You can find information on the return of excess process on our IRA return of excess contribution page.
As a custodian, will I have access to the Roth IRA for Kids account under my login?
Yes, you will have access to see the account and place trades using your login information for Fidelity.com.
Can the child request a withdrawal or place trades in their account?
No, only the custodian is allowed to place a trade or request a withdrawal from a Roth IRA for Kids account.
Once the child becomes an adult, how do I remove myself as the custodian?
The process to transfer assets to a former child who is now an adult is easy. First, they will need to open a Roth IRA in their name. Then you, as the custodian, can request by phone a transfer from the Roth IRA for Kids account to their new Roth IRA.
What happens if earnings are withdrawn before the account owner is age 59½?
Taxes and a 10% penalty will apply if the Roth IRA owner withdraws earnings before age 59½ and if the the account has not been opened for 5 years, unless the withdrawal meets qualified withdrawal criteria, including a first-time home purchase, disability, or death. Keep in mind: At any time, contributions to the IRA can be withdrawn without taxes or penalty.
Investing involves risk, including risk of loss.
No account fees or minimums to open Fidelity retail IRA accounts. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs), and commissions, interest charges, and other expenses for transactions, may still apply. See Fidelity.com/commissions for further details.
$0.00 commission applies to online U.S. equity trades and exchange-traded funds (ETFs) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (historically from $0.01 to $0.03 per $1,000 of principal). Other exclusions and conditions may apply. See Fidelity.com/commissions for details. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Institutional® are subject to different commission schedules.
StockBrokers.com 2023 Online Broker Review, January 2023: Fidelity was ranked No. 1 overall out of 17 online brokers evaluated in the StockBrokers.com 2023 Online Broker Review. Brokers were each assessed within eight primary categories: Commissions & Fees, Research, Platforms & Tools, Mobile Trading Apps, Investment Options, Education, Ease of Use, and Overall. Best in Class honors were awarded to the top five brokers in each of the following areas: Active Trading, Banking Services, Beginners, Customer Service, Futures Trading, Investor Community, IRA Accounts, Options Trading and Penny Stock Trading.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917