This tax-advantaged retirement account allows contributions from a child’s earned income, such as money from a summer job or after school employment. The funds grow tax-free, contributions can be used later for education or a first home purchase and qualified withdrawals in retirement are also tax-free, providing significant long-term benefits. By starting early, children can take full advantage of compound interest, and potentially building a substantial nest egg over time. Additionally, a custodial Roth IRA teaches valuable financial lessons and instills the habit of saving from a young age.