A child or teen working a summer job may be eligible to make an annual contribution to an IRA. To be eligible, the child must have earned income that could be from a full-time or part-time job, or other activity such as baby-sitting, lawn-mowing, or a paper route.
There is no requirement on the source of funds used to make the contribution, so parents or grandparents can make a contribution for a child or grandchild.
The amount of the IRA contribution is limited to the child’s total earnings, up to a maximum of $5,500 for 2013. Either a traditional IRA contribution or a Roth IRA contribution can be considered (assuming the income limits are not an issue).