If your grandchild earned income from a job in 2014, he/she may contribute to a Roth IRA. Thinkstock By Kimberly Lankford, Contributing Editor December 19, 2014 Can I open a Roth IRA for my 16-year-old grandson as a gift?As long as your grandson earned income from a job in 2014, he may contribute to a Roth IRA. His contributions may not exceed the amount of money he earned for the year, up to a maximum for someone his age of $5,500. You may be able to open the account for him and contribute the money yourself, or you may have to give the money to his parents to make the contribution, depending on the rules of the firm that acts as the account administrator. See Also: Everything You Need to Know About IRAs Either way, contributing to a child’s Roth IRA can give him or her a huge head start. Your grandson may withdraw the contributions tax- and penalty-free at any time, which could be a great source of money to help make, say, a down payment on a house. And after age 59½, he can withdraw both the contributions and earnings tax- and penalty-free. The contributions you make now, when your grandson is a teenager, will grow enormously by the time he retires. Just a $2,000 contribution when he’s 16 could grow to more than $60,000 by the time he’s 67, if the investments earn 7% per year. Not all brokerage firms and mutual fund companies let minors open IRAs, but several firms make it easy to open an account and charge low fees with low investment minimums. TD Ameritrade, for example, has no minimums or annual fees for its IRAs, including custodial accounts. Charles Schwab allows minors to open a custodial Roth IRA with $100, and it charges no annual or maintenance fees. Both let custodial IRAs invest in anything that is available to regular IRAs. Advertisement The logistics of opening an account for a grandchild can be a bit tricky. The account must be in the minor’s name and the custodian’s name. The rules for who can be the custodian vary by firm and sometimes by state. Charles Schwab generally lets any adult act as custodian, including a grandparent. TD Ameritrade requires the parent or legal guardian to be the custodian. The custodian will need the child’s name, address, date of birth and Social Security number to open the account. It’s also important to know how much money the child earned, so you don’t put in more than the allowed amount. Got a question? Ask Kim at email@example.com.