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TD Ameritrade Minor IRA Account

TD Ameritrade Minor IRA Overview

Did you know that there is a special type of retirement account that allows qualifying minors to get started saving for their retirement at any age? The account is called a Minor IRA and there are only certain brokers that offer the account type. TD Ameritrade is one of the few brokers that offers a Minor IRA. In this article, we explore the details, benefits, and rules of a Minor IRA with TD Ameritrade and discuss our findings.

Account Eligibility for a Minor IRA at TD Ameritrade

There is no minimum age requirement for a minor to have a Minor IRA, but the minor has to be under the age of 18 (regardless of the state). The only requirement is that the minor must have earned income. The earned income can come from a job and/or self-employment.

Examples of sources of earned income for minors include getting paid by their parents for baby-sitting, making money from neighbors for mowing lawns, running a lemonade stand, or having any type of regular job. TD Ameritrade has no requirements to keep records of income earned by the minor but for record keeping and tax reporting purposes, it is a good idea to keep detailed records of all income earned including dates, amounts, and descriptions of the work done.

TD Ameritrade minor ira

Minor IRA Account Types

A Minor IRA with TD Ameritrade can be opened as either a Traditional or a Roth IRA. All the same tax rules and tax benefits of regular Traditional and Roth IRAs apply to the Minor IRA.

Contribution Limits of a Minor IRA at TD Ameritrade

Any adult is allowed to open and contribute to a Minor IRA on behalf of the minor. This includes parents, siblings, aunts and uncles, and even non-family members such as family friends or a neighbor. There are no limits to the number of Minor IRAs that can be opened on behalf of the minor however, the contribution limit is cumulative across all of the Minor IRAs combined.

Contributions can be made into a Minor IRA for the amount of earned income that the minor had in the tax year up to a maximum of $6,000. In other words, contributions can’t total more than the amount of money that the minor actually made. For example, if in 2023 the minor makes $1,000 for baby-sitting money from their parents and makes another $1,000 for mowing lawns around their neighborhood, then the contributions to their Minor IRA cannot be more than the total $2,000 that they made in the year. Another example is if a minor was to get a job at their local grocery store and make a total of $10,000 for the year, then the maximum contributions to their minor IRA could only be $6,000.

One of the coolest parts about a Minor IRA is that not only can the adult that opens the account on behalf of the minor contribute into it, but anyone else can as well. So, if you wanted to have a bunch of people make small contributions into your child’s Minor IRA as a birthday present for example then, you would simply share the TD Ameritrade Minor IRA account number with those people that you trust and they could all make small contributions into it, up to the minors earned income amount or the maximum of $6,000.

Open TD Ameritrade IRA

Open TD Ameritrade Account

Responsibilities of the Custodian of a Minor IRA

The adult that opens the Minor IRA on the minor’s behalf is called the Custodian of the account and they have certain responsibilities when it comes to investing, managing, and distributing the account. Until the minor reaches the age at which they are no longer considered a minor under your specific state’s law, the custodian has full control over the account and the minor has no control over the account at all. When the minor reaches the age of being considered an adult, it is the custodian’s responsibility to transfer all the account assets directly to the minor.

The custodian is responsible for monitoring any and all Minor IRA accounts in the minor’s name to make sure that the total contributions are within IRS limits and do not exceed the minor’s earned income. The custodian is also responsible for investing all assets in the account for the benefit of the minor.

How to Open a Minor IRA with TD Ameritrade

Opening a Minor IRA with TD Ameritrade is a little bit of a confusing process so, here is a simple break down of the steps of how to open the account on TD Ameritrade’s website. The easiest way to get to the proper place for opening a Minor IRA with TD Ameritrade if you are not an existing customer is to open a regular brokerage account and then to chat with customer service on its website and they can guide you through the process.

TD Ameritrade minor ira

For existing customers, once logged in, first click on the Planning & Retirement tab towards the top of the website. Then, select the option from the drop-down menu that says IRA. Next, click on the Strategies link from the bottom of the menu on the left side of the page. Then, select either the Minor IRAs link underneath the Strategies menu on the left side of the page or select the Minor IRAs bolded option towards the middle of the page. Lastly, select the small Open an IRA link in the grey box towards the middle-right of the page.

Minor IRA Investment Options with TD Ameritrade

A Minor IRA has access to TD Ameritrade’s same full suite of investment options as a regular IRA does. You can invest in stocks, bonds, CDs, options, ETFs, and mutual funds. You can choose from TD Ameritrade’s offering of dozens of commission free ETFs, hundreds of no-transaction fee mutual funds, and commission free treasury bonds purchased at auction.

In addition, you get to take advantage of TD Ameritrade’s $0 commissions on online U.S. exchange-listed stock and options trades. TD Ameritrade also has amazing stock, ETF, option, and mutual fund screener tools to help you research and find the right investments to grow your Minor IRA.

Open TD Ameritrade IRA

Open TD Ameritrade Account