Robert Brokamp

First of all, the kid must have earned income from a job, and the contribution cannot exceed what they earned that year.

That income is going to be pretty easy to document if they're working at McDonald's or something like that, because they're going to get the W-2.

But what about cash-based jobs like babysitting or lawn mowing?

There's a bit of a debate about this among tax pros, but I think the bottom line comes down to that type of income qualifies if the child keeps detailed records about where the money came from, deposits the money in a bank account, and files a tax return.

But you might want to check with your local favorite tax pro just to make sure.

Roth IRAs do have contribution limits.

Annual contributions are capped at $7,500 in 2026.

And there are penalties for early withdrawals of earnings.

So while the contributions can be withdrawn tax-and-penalty-free, the earnings cannot be accessed without penalty until age 59 1⁄2, though there are some exceptions.

And finally, also with Roth IRAs, the contributions are irrevocable, and you do lose control once the kid becomes an adult.

And finally, we have 529 college savings plans.

And these are state-sponsored accounts specifically designated for educational savings.

And when they were originally created, they really were mostly for college.

But due to a series of laws that have been passed, including last year's One Big Beautiful Bill,

The list of qualified expenses have expanded to include all kinds of things, elementary school, secondary school, paying back student loans.

There are limits on all this, even for professional fees, taking certain standardized tests.

So a great source for an updated list of qualifying expenses for 529 plans is savingforcollege.com.

So visit that to learn more.

I'm just going to focus on 529s because they're the most popular.

There is another option called the Coverdell, which might be appealing to you if you want to invest in individual stocks for college.