By Grace Weinstein

Want to give your kids a financial head start? Open a Roth IRA in their names as soon as they have earned income.

There are no minimum-age limits for making contributions to an IRA. If your 10-year old earns money walking dogs or filing papers in your business, if teens flip burgers at the local fast-food outlet or work as counselors at a summer camp, the money they earn can be put to work to grow toward their eventual retirement. Do keep accurate records to document earnings, however, especially if your child is working for you.

If a child is reluctant to commit income to a far-distant goal, you can make a gift to the child for the amount of the contribution. Up to $5,000 a year (if that much is earned) may be contributed to either a traditional IRA or a Roth IRA. For youngsters, the Roth is generally preferable.

Withdrawals from traditional IRAs are subject to income tax; withdrawals before age 59 1/2, with some exceptions, are also subject to a 10 percent tax penalty. Contributions are deductible for taxpayers meeting income limitations. Youngsters almost always meet the income limitations but, because they are in low tax brackets, the deduction isn't worth much.

Contributions to Roth IRAs are made with after-tax income, but children are generally in the lowest tax bracket so the tax bite is minimal. Withdrawals at retirement, after years of compounded growth, will be tax-free. Better yet, contributions can be withdrawn without penalty and used to pay for college tuition, fees, and books. Up to $10,000 may also be withdrawn without penalty when the Roth owner is ready to buy a first house.