Next, we'll discuss two types of IRAs for children, the benefits offered by these tax-advantaged investment vehicles, and how to open and contribute to an IRA for children. The same contribution and distribution rules that apply to traditional and Roth IRAs also apply to escrow IRAs. However, you can still contribute to a Roth IRA and make cumulative contributions to a Roth or traditional IRA, regardless of your age. Roth IRA providers typically require an adult to open and administer a Roth IRA with custody on behalf of a minor.
If the escrow IRA is a Roth IRA, the account owner can withdraw funds without penalty, unlike traditional IRAs. The child's income serves as a limiting factor in contributing to a traditional Roth IRA or IRA.