Roth IRA for a child

Any parent, grandparent, aunt, uncle or family friend can open a Roth individual retirement account to help a child invest for the future.
 Like a regular Roth IRA, the minor must have earned income to be eligible, and the contribution amount cannot exceed the earnings in a given year. It doesn't have to be in the form of a paycheck, either. Cash is fine as long as it's been documented. 
The maximum contribution for 2018 is $5,500 but that will rise to $6,000 in 2019. The adult is the "custodian" and maintains control of the account and invests on the child's behalf until they meet the required age, which varies by state but is generally age 18. And unlike a traditional savings account, a Roth IRA lets you and your child pick and choose investments, which can make a substantial difference on your rate of return. The minor can then use those funds for college costs or other expenses, like a down payment on a first home.
 While traditional retirement accounts have many restrictions about taking the money out, Roth IRA account holders can withdraw their contributions at any time without taxes or penalties. Plus, after the Roth IRA has been funded for five years, your child can take a distribution of up to $10,000 to buy their first home, without having to pay taxes or penalties on those funds. Contributions to a Roth IRA are taxed up front and then withdrawals in retirement are tax-free, which is a big perk for young savers who are in a lower tax bracket now than they will be later in life.