(FORTUNE Magazine) – I am considering opening a Roth IRA for my daughter, in her name. Would it affect her future college aid? --Tod

Dear Tod: You can indeed get your daughter on the path to becoming a future millionaire by opening a Roth IRA in her name, as long as she has earned income during the year. According to Bernie Kent, a tax partner with accounting firm PricewaterhouseCoopers, that income can be in the form of either wages from an employer or from self-employment income such as babysitting or mowing lawns.

The maximum amount your daughter can put into a Roth for 2004 is the lesser of $3,000 or 100% of her income for the year. You can even give her the money to fund the Roth--just as long as you don't give her more than she actually earned.

As for college aid, the savings in your daughter's Roth IRA--unlike money in a bank account--will not reduce her eligibility for federal need-based financial aid (such as grants and subsidized loans), says Kal Chaney, author of Paying for College Without Going Broke. But when it comes to aid awarded by the colleges themselves, some private schools may take the Roth account into consideration. Bottom line: If you think your daughter might qualify for significant need-based assistance (see www.collegeboard.com), avoid putting money in her name. But if it looks like she'll qualify for little or no aid anyway, the Roth is a great idea.

Got a question? Send it to jrevell@fortunemail.com