Roth IRA for son

[NitroZ7]

My son said his friend opened up a Roth IRA without any earned income. He went to SunTrust and the person there said if you are going to college that is considered work? I looked it up and you have to have earned income and that doesn't include interest, dividends or capital gains. My son is all excited to open a Roth IRA because he said he has $6,000 that would be worth $350,000.00 in 50 years at an 8% return. I like that but how do you qualify to open one up? I guess I could pay him as an investment consultant and pay him each month for his stock recommendations which ironically turn out to be better than mine but I'm not sure how his friend opened one up or if the person at SunTrust didn't give a crap and just wanted to open another account. I emailed my CPA on this and I am expecting him to confirm my suspicions. Anyone know about the college loophole (which I bet doesn't exist)?

[CatFan]

Doesn’t matter whether you go to college or not, if you don’t have earned income reported to the IRS, you can’t contribute.

[NitroZ7]

Doesn’t matter whether you go to college or not, if you don’t have earned income reported to the IRS, you can’t contribute.

That is my understanding as well. I think his friend is being misinformed.

[boneil]

open up his own brokerage account. And when he can, then open an IRA. I wish I could have bought stocks when I was a kid.

[NitroZ7]

open up his own brokerage account. And when he can, then open an IRA. I wish I could have bought stocks when I was a kid.

He has a brokerage account at Vanguard. He just wanted to open a Roth because his friend did

[boneil]

He has a brokerage account at Vanguard. He just wanted to open a Roth because his friend did

That sure is better than telling you he wants a new phone because his friend has one

[UWBASS]

You absolutely need earned income to qualify to open a Roth. Typically W2 wages or 1099 income are eligible with a couple other exceptions - it has to be taxable to be eligible. https://finance.zacks.com/considered...-ira-4567.html

Obviously would need at least 6K of earned income to max out annually but you can make smaller contributions if your earned income is less than that. I work in an advisor capacity for a credit union with many of our members students with no earned income so unfortunately cannot contribute so have encountered this many times over the years.

[NitroZ7]

I did find a bit of a loophole. He is getting a scholarship for college so if that is taxable then it can be classified as earned income. I don't think his will be taxable though because it just covers tuition.

[NitroZ7]

I just walked out into the kitchen and my son was on the IRS website and in a chat group with his friends where they were arguing about whether you can open it without earned income. Future BBCer's