Level 15

Retirement tax questions

"Don't people gift into a Roth IRA for kids who have no income?"
No. They don't because they can't. Those folks are usually self-employed with a home based business and hire their kids in their home based business and pay them a wage. Then they can deposit the lesser of $5,500 or their total earnings in a ROTH IRA. If total earnings is less than $5500, then the amount deposited is what's left after the child pays their SS and Medicare taxes, unless the parent who hired them "does the thing" so they don't have to pay those taxes.

In a nutshell, your son's ROTH IRA deposits in a tax year, can not exceed his taxable earnings in that same tax year. At best, the most your son could possibly deposit in his ROTH IRA with no penalties (with $3000 of earned income reported on a W-2 and that's his only income for the entire year) would be $2770.5 after paying the 1.45% medicare tax and 6.2% social security tax.