Robert Brokamp

It's also unclear how Trump accounts will affect financial aid eligibility.

So you can monitor the official website.

Again, that's trumpaccounts.gov for updated information.

I expect more and more information will be coming out over the next few months.

Now let's move on to Roth IRAs.

And I'm choosing the Roth specifically.

You could open a traditional IRA for a kid.

But remember, with the traditional IRA, you get a tax deduction, but the withdrawals are taxable.

But most kids don't need a tax deduction, which is why you would go with the Roth.

No tax break today, but the money grows tax-free as long as you follow the rules.

A Roth IRA could be open for any kid who has earned income.

Let's talk about some of the benefits.

First of all, decades of tax-free growth.

The IRA started in childhood, could grow for 50 plus years, potentially resulting in a substantial wealth by retirement.

You do also have semi-flexible withdrawals.

With the Roth IRA, the contributions, not the earnings, but the contributions can be withdrawn at any time, tax and penalty free.

It's limited to no financial aid impact.

Retirement accounts are generally not counted for financial aid purposes, especially when you're using the FAFSA.

Now, individual colleges may have their own reporting requirements, especially the 300 or so that use the CSS profile, so definitely pay attention to the financial aid reporting requirements for the colleges that you may be considering for your kids.

What are the downsides of the Roth IRA?