How old do you have to be to open a Self-directed Roth IRA?

Question

Or a Self-directed Roth 401k?

How do you set up these accounts?

My parents use "The Entrust Group" for their self direct Roth IRA account. Are there any other companies that are good with self-directed investment accounts?

Thanks for your time.

Bryan Hancock · Answer

I guess if you add additional constraints to the question posed you can constrict the age.

I know of several people who have set up SDIRAs for their newborns.  I can't see how anyone would argue this is poor behavior or unethical.  I wish more people in our society would engage in behavior like this so that we don't have a generation of folks addicted to entitlements instead of embracing personal responsibility.  Kudos to Peter for being in the latter category.

Jeff S. · Answer

There is no minimum age. You just need a social security number and earned income. I have a good friend whose 8 month old is billing at $120/hour modeling for the Gap, H&M, and others. She now has a both a Roth and a 529 college savings plan. The parents are trying to get her on TV, where I understand she can make in the tens of thousands of dollars.

Can you imagine having astute parents investing your money for you tax free from essentially the time you were born?

Dave Toelkes · Answer

I am not convinced that there is no age restriction.  Minors can not inherit directly.  Minors can not sign a legally enforceable contract.  So how can a newborn sign the paperwork to establish an IRA?

Obviously, the parent or legal guardian is acting as a custodian of the account for the minor child.

I would think that one would need to be at least 18 years old to be able to legally open an account without requiring a custodian.

Jon Klaus · Answer

One of the guys in top management at Equity Trust talks about starting an SD Roth IRA for his newborn at less than 1 hour old.  Yes, the newborn actually had "earned" income, because dad used images of the child for marketing.

Jarred E. · Answer

Correct no age restriction. I personally have a self directed Roth with Entrust. They are certainly not the cheapest when it comes to their fee structure but they are a well run effecient custodian. Ask for Jason Debono, he can aswer virtually any question about opening an account. Good guy.

Bryan Hancock · Answer

I am not aware of an age restriction.  As long as you have earned income you should be able to set up and account at age 0.  I have heard of people paying their children to "model" for things related to their business so they can set up SDIRAs and have them start growing tax free (deferred?) for their whole childhood.

Entrust is good.  Equity Trust is also a big name.  There are loads of SDIRA entity companies that will allow you to get checkbook control over your funds.  Contact them and follow their process to get started.  I send my private money folks to Asset Exchange Strategies in Cedar Park...right down the road from me.  They are a great option too.

Bill Gulley · Answer

don't think I suggest there was, and say, how did that ticket come out about streaking through the zoo last fall?

Bryan Hancock · Answer

I don't think anyone is disagreeing with you Bill.  You need to be 18 to do it on your own presumably.  We were just giving additional information about how it could be done if you wanted to set something up for your kids.

Again, I don't think anyone would argue there is anything unethical about setting your kid up with a retirement account that compounds tax free for decades.

Bill Gulley · Answer

I assume the parents are 18! The quesation was not how old must you be to have a SDIRA, it asked how old do you have to be to OPEN a SDIRA, clearly, to open any financial account in your name or in that of others, you must meet the statue of frauds, have the capacity to contract and unless emancipated under state law, and even then the administrator/trustee may not recognize the emancipation issues,  you will need to be 18 years of age.

Now, you can read all about infants with accounts, opened by someone else on behalf of the minor.

Bryan Hancock · Answer

Here is some information from Entrust about starting a Roth IRA for your children:

Entrust Primer

For future readers...Your parents can set one up for you prior to 18.

How old do you have to be to open a Self-directed Roth IRA?

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