PROVIDENCE – Boston-based Fidelity Investments said growth in new accounts and total assets for its Fidelity Roth IRA for Kids has remained “strong” since the product was introduced in January 2016.
For the first six months of this year alone, the product has seen a 39 percent increase in accounts and a 51 percent increase in assets, according to Fidelity.
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The company said the growth has been driven in large part due to the product’s popularity among parents, with children under age 18, who want to give their kids a jump-start on saving for the future.
A Roth IRA for Kids is a custodial account that can be opened and managed by any adult – a parent, grandparent, aunt, uncle, or even a family friend – on behalf of a minor earning income, the company said.
Qualifying income can come from a job or self-employment such as babysitting, mowing lawns or shoveling snow. The earnings and withdrawals are free of federal taxes.
“Parents know that time is on their child’s side and want to encourage good savings habits as soon as they’re able to start earning their own money,” said Melissa Ridolfi, Fidelity’s vice president of retirement and college leadership.
“Let’s be honest,” she added, “convincing a child to hand over their hard-earned cash to invest in a Roth IRA may be challenging, but engaging in financial conversations when your child is beginning to understand the value of money can help them develop the discipline to make wise financial decisions later.”
Scott Blake is a PBN staff writer. Email him at Blake@pbn.com.
