They are now, and so are millions of other workers who are making this a big IRA season for many mutual fund companies, which offer IRAs. Our IRA contributions are running about 30 percent higher than last year, which was only up 5 percent from the year before. Those who make less can contribute their entire earned incomes, and non-working spouses of wage earners are eligible to make contributions, too. For young workers short on cash, the money to make contributions often comes from a parent or grandparent who appreciates the magic of compounding investment returns. If returns are higher or a child starts very young, multimillion-dollar balances are possible.
Minors can have IRAs managed by a parent as long as the child has earned income.
Some varieties have additional tax benefits, but not everybody is eligible. The Roth IRA, which Rohrmann recommended to his sons, is the best alternative for most workers who qualify. Although you cannot deduct the contributions from your taxes as you make them, you don't ever have to pay taxes on your investment earnings if you follow the rules. That's a great deal, especially for young workers such as Pierce and Adam, who began working while students at Seminole High School. Pierce, who now lives in New York City, just started a job traveling the world selling Repechage skin care products to spas.