Yes, you can open a Roth IRA for your child, but only if they have earned income

A child can hold a Roth IRA in their own name starting at any age, as long as they earned money during that year. The child does not have to be a teenager — even a 7-year-old with income from a modeling job or a paper route can have one. The account belongs to the child, not the parent, though a parent or guardian manages it until the child reaches the age of majority (usually 18 or 21, depending on your state).

The earned income requirement is strict. The child must have actually worked and received a W-2 or 1099 form, or be self-employed. Money from allowances, gifts, or investment returns does not count. The contribution limit for 2024 is the lesser of $7,000 or the total amount the child earned that year — so a 10-year-old who earned $2,000 can contribute up to $2,000, not $7,000.

One parent or both parents can contribute to the account on the child's behalf, but the contribution cannot exceed what the child actually earned. If your child earned $3,000 mowing lawns, you can put up to $3,000 into their Roth IRA, but not more.

Key Takeaways

  • Your child must have earned income from work in order to open and contribute to a Roth IRA — gifts and allowances do not count.
  • The maximum contribution in any year is either $7,000 or the child's total earned income for that year, whichever is smaller.
  • You open the account through a brokerage or bank, and you act as the custodian until your child reaches the age of majority in your state.
  • Money in a child's Roth IRA grows tax-free and can be withdrawn tax-free in retirement, giving decades of compound growth before the child ever touches it.
  • If your child does not use all their earned income for the Roth contribution, they can spend the rest or save it in a regular account.

Where to open a custodial Roth IRA

You open a custodial Roth IRA through a brokerage, bank, or investment firm — the same places adults open regular Roth IRAs. Common options include Fidelity, Vanguard, Charles Schwab, E-Trade, and most local banks. Call or visit their website and ask to open a custodial Roth IRA for a minor. The brokerage will ask for your child's Social Security number and your information as the custodian.

There is no special form or government permission required. The brokerage handles the setup. You will need to provide proof of your child's earned income — usually a copy of their W-2, 1099, or a letter from their employer stating how much they earned. If your child is self-employed (for example, running a lawn care business), you may need to show business records or a tax return.

Once the account is open, you decide how to invest the money. Most brokerages offer target-date funds, index funds, or age-based portfolios designed for long-term growth. You manage the investments until your child reaches the age of majority, at which point the account transfers to their control.

How much your child can contribute each year

The contribution limit changes each year and is set by the IRS. For 2024, the limit is $7,000 or 100% of earned income, whichever is less. This limit applies whether your child has one job or multiple jobs — you add up all earned income for the year and that is the maximum you can contribute.

You do not have to contribute the full amount. If your child earned $5,000, you could contribute $2,000 to the Roth IRA and let your child keep or spend the other $3,000. The contribution does not have to happen in the same year the income was earned — you have until the tax filing deadline (usually April 15 of the following year) to make the contribution for the prior year.

If your child earned income in multiple years, each year has its own contribution limit. A child who earned $1,500 at age 8 and $3,000 at age 10 could have $4,500 total across both years, not $7,000 per year.

Tax implications and why this matters for your child's future

Money contributed to a Roth IRA is not tax-deductible — you contribute after-tax dollars. However, all growth and earnings inside the account are tax-free, and your child can withdraw the money tax-free in retirement. This is the main advantage of a Roth over a regular savings account or taxable investment account.

Because your child has decades until retirement, even small contributions now can grow into substantial sums. A $2,000 contribution at age 10, invested in a diversified fund and left untouched until age 65, could grow to $100,000 or more depending on investment returns. Your child pays no taxes on that growth.

There are no income limits for a child's Roth IRA, and no required minimum distributions — your child never has to withdraw the money if they do not want to. The account can sit and grow for 50+ years.

What happens to the account when your child turns 18 or 21

When your child reaches the age of majority in your state (usually 18, sometimes 21), the custodial account automatically converts to an account in their name alone. You no longer have control. Your child can then manage the investments, make new contributions (if they have earned income), or leave it untouched.

The account itself does not close or change — it simply transfers from your control to theirs. All the money and growth stays in the Roth IRA. Your child receives paperwork from the brokerage explaining the change and how to access their account online.

Some brokerages allow you to set up a conversation with your child before the transfer to explain how the account works and why you opened it. This can help your child understand the value of long-term saving.

Common situations: self-employed children and family businesses

If your child works in your family business or is self-employed, the same rules apply — they must have earned income documented on a W-2 or Schedule C (self-employment tax form). Many parents hire their children to do legitimate work (filing, data entry, social media, yard work) and pay them a reasonable wage. The child receives a W-2, and you can then contribute to their Roth IRA up to what they earned.

The IRS scrutinizes family business arrangements, so the work must be real, the pay must be reasonable for the work done, and you should keep records (timesheets, descriptions of tasks, pay stubs). If your child is 8 years old and you pay them $10,000 to sit in the office, the IRS may disallow it. If your child is 14 and you pay them $15 per hour to do actual filing and data entry for 20 hours per week, that is defensible.

If you are unsure whether an arrangement will hold up, consult a tax professional or accountant before setting it up. The cost of a consultation is far less than the cost of an audit.

Withdrawals before retirement and the earned income requirement

Your child can withdraw contributions (the money you put in) from a Roth IRA at any time, tax-free and penalty-free. Withdrawals of earnings (investment growth) before age 59½ are usually subject to taxes and a 10% penalty, with some exceptions for education expenses or first-time home purchases.

Because your child is young and the account is meant for retirement, most families leave the money untouched. But if a true emergency arises, the contributions are accessible without penalty.

The earned income requirement applies only to contributions, not to withdrawals. Once money is in the Roth IRA, your child can withdraw it whenever they want (though early withdrawal of earnings carries taxes and penalties). The account does not disappear if your child does not work in a given year.

Frequently Asked Questions

Does my child need a job to open a Roth IRA?

Yes, your child must have earned income from work in the year you want to contribute. This includes W-2 wages, self-employment income, or modeling and acting income. Allowances, gifts, and investment returns do not count as earned income.

Can I contribute more than my child earned?

No. The contribution limit is the lesser of $7,000 (for 2024) or the total amount your child earned that year. If your child earned $2,000, you can contribute up to $2,000, not more.

What if my child does not use all their earnings for the Roth contribution?

Your child can spend or save the rest however they want. If they earned $3,000 and you contribute $1,500 to the Roth IRA, they can keep the other $1,500 in cash, a regular savings account, or anywhere else.

Can I withdraw money from my child's Roth IRA if I need it?

No. The account belongs to your child, not you. You manage it as custodian, but you cannot withdraw the money for your own use. Your child can withdraw their contributions at any time, but earnings withdrawn before age 59½ are subject to taxes and penalties.

What happens if my child does not work one year?

Your child cannot make a new contribution that year because there is no earned income to base it on. However, the money already in the account stays there and continues to grow tax-free. Your child can resume contributions in any future year when they have earned income again.