Question about IRA?

Question

Im 16 years old

Saving for college, and plan on going to open a free IRA at my local bank.

So my question is this...

1) IS it ok when there is a year when someone doesn't put any money into their IRA lets say 4 years that someone puts $0 into their IRa. Because they are busy saving and going to college. Will the Fed accept that or any bank?

2) Should I get an IRA for my self im 16 years old and can get my parents consent to do so?

Answer 1

If you're saving for college you should open a 529 account or an Education Savings Account (ESA).  Check your state's 529 plan first, as there may be tax incentives.  Other than that find a low cost plan, like Ohio's.  

If you have earned income from a job then you can open a Roth IRA to save for retirement, which would be a good thing to do.  Make sure that there are no annual fees or account set up fees at your bank.  Once you have enough money (>$1000) you can transfer the IRA at Vanguard, which I recommend.  

An IRA is just a bucket.  You can put anything in it.  You don't have to add every year.  But if you take the money out, usually there are taxes and penalties due.

Answer 2

Yes, I also opened my IRA when i was 16 and there were years during college that i did not work so i could not fund my IRA. Remember that you must be worked, for the money to go into an IRA it must be earned income.

Also because it is investing, i think you will need to have at least one of your parents be on the account as well. Good Luck!