You misunderstood. Unless the child has taxable compensation (money that the child worked for reported on a W-2 or was self-employed income) as much as the contribution then it is an excess contribution subject to a penalty that repeats every year until the money is removed.
A parent can establish a custodial brokerage, savings, or other account type for a child but NOT an IRA. A parent can only contribute to an IRA if it is the parents own IRA in the parents name. An IRA kin a child's name with the child's SSN can only be funded from the child's own earned income.
The maximum IRA contributions for 2019 is $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year which ever is less.
(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).
(The "your" refers to the IRA owner)
See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
