First Roth IRA for my children

My kids, 21 and 18, worked over the summer and want to put $5500 and $2900 respectively in Roth IRA’s by 4/15/14. I thought Fidelity Spartan 500 which is an index fund of the S&P 500. What do you think?

Terry Says:  Good idea.  But you must be sure that they received tax documentation that this is earned income — either W-4 or 1099 — so they are eligible to contribute to a Roth.  Of course, they don’t get a deduction (they don’t need it!) but they DO get to start this money growing tax-free at a very young age.  (And for other parents who might be considering this, do the same thing — even if the kids didn’t save their money, you can make a contribution for them, up to the limit of $5500 or whatever they earned.)

But do check with Fidelity about required minimums.  The Spartan Index funds require $10,000 unless it is part of a group retirement plan.  But for the “Investor Class” S&P 500 index fund,  the minimum IRA investment is $2500.  There’s not much difference between the funds, they use the same benchmark, but fees are slightly higher in the latter.