Can I Open a Roth IRA for My Child?

Using a custodial Roth IRA to help your child save

A teen waiter working at a cafe

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Roth individual retirement accounts (IRAs) are designed to help you save for retirement. Many people open a Roth IRA when they're an adult, but these accounts can also provide a powerful investment tool for minor children.

If your child has some type of income, you can open a Roth IRA on their behalf to get them started on the road to investing.

Let’s learn how Roth IRA contributions must meet certain limits and more about their tax benefits, as well as the pros and cons about opening a Roth IRA for your child.

Key Takeaways

  • You can have a Roth IRA at any age, so you can open a Roth IRA for your child.
  • To open a Roth IRA for a child, they must receive taxable compensation.
  • Minors can own custodial Roth IRAs, but the accounts must remain under custodial management until the minor reaches adulthood.
  • Roth IRAs allow for early withdrawals to cover certain types of expenses.

Does Your Child Qualify To Open a Roth IRA?

If your child receives taxable compensation and files tax returns, they likely qualify for a Roth IRA. Taxable compensation can include many types of income, including commissions, professional fees, salaries, self-employment income, and wages. So whether they earn money babysitting, restocking store shelves, or selling merchandise online, they can begin saving for retirement with a Roth IRA.

The annual contribution limit for Roth IRAs in 2022 is $6,000 for people under age 50, and $7,000 for people over 50. You can contribute if you make up to $129,000 per year.

Contribution limits decrease for earnings above $129,000. For example, if your child earns an income of $130,500 in 2022, they can only contribute up to $5,400 to their IRA for that year. Contribution limits decrease to $0 after reaching an annual income of $144,000 for 2022.


The IRS bases limits on an individual’s adjusted gross income (AGI). Gross income can include business income, capital gains, dividends, and wages. Adjustments can include expenditures such as student loan interest and contributions to a retirement account.

Custodial Roth IRA Accounts

Although your child may earn an income, they can’t open a Roth IRA account on their own until they reach adulthood, or “age of majority,” which is 18 in most states. However, you can open a custodial Roth IRA account on their behalf.

When you open a custodial Roth IRA account, you serve as the custodian. That means you can manage the assets of the account, and the financial institution sends communications and statements to you.


At all times, however, funds contributed to the custodial account belong to the minor. Once your child reaches adulthood, they take full control of the account.

Advantages of Opening a Roth IRA Account in Childhood

Establishing Roth IRAs for your minor children can provide them with significant benefits toward their retirement savings.

Tax-Free Growth

Roth IRA contributions are made with after-tax funds. When the child reaches retirement age and makes qualified withdrawals, they won’t have to pay taxes on the money, including on any gains their investments made.

Let’s say your child earns $6,000 as a summer camp counselor. They can choose to invest all their income in their Roth IRA or they can contribute any portion of that income.

Say you opened a custodial Roth IRA, for your 15-year-old that had an average 7% annual rate of return. If you or your child makes annual contributions of $3,000 for the first five years, and maximum contributions (per 2022 limits) in subsequent years, the account would hold more than $3 million when they reached age 70.


You can use a compound interest calculator online to help you estimate what contributions to a retirement account may yield with an expected rate of return after a set period of time.

Ability To Roll Over Funds

When your child reaches adulthood, their employer may provide another type of retirement plan, such as a 401(k). Your child will be able to roll over any 401(k) funds to their Roth IRA if it works to their tax advantage. They’ll also be able to move funds from a traditional IRA to their Roth IRA. However, with Roth IRAs, you can only roll them over into another Roth IRA.

Early Qualified Distributions

Roth IRAs are designed to provide retirement income. IRS rules allow IRA owners to receive qualified distributions after reaching age 59½. In most cases, early withdrawals incur a 10% additional tax. But the IRS allows early qualified distributions for other purposes, which can include:

  • Disability of the account owner: Roth IRA owners can begin distributions if they have a disability before age 59½. And a beneficiary can receive funds if the account owner becomes disabled or dies before age 59½.
  • Down payments for first-time homebuyers: Your child can withdraw up to a lifetime limit of $10,000 to purchase their first home.
  • Higher-education expenses: Your child can make qualified withdrawals to pay for college expenses.
  • Federal tax levies: Roth IRA owners can make early withdrawals to settle federal tax levies.
  • Medical expenses: You can make early withdrawals from a Roth IRA to cover medical expenses, up to the amount of the insurance deductible.
  • Reservist distributions: Reservists can make early Roth IRA withdrawals when they must serve active duty that exceeds 179 days.

How To Open a Roth IRA for Your Child

Some financial institutions allow you to apply for a custodial Roth IRA online, others may require you to submit a paper application, and some offer both options. When opening an account online, you can often submit an application and fund the account at that time.

Custodial Roth IRA applications require you to submit information about the account owner (your child) and custodian (you). If you gather all required information beforehand, you can complete the application more quickly. Here’s the information you’ll typically need.

Minor’s Personal Information

  • Address
  • Phone number
  • Date of birth
  • Social Security Number
  • Citizenship status
  • Driver’s license or passport number
  • Employment status and type of business

Typically, an application will require all the above information about the custodian, too.

Minor’s Financial Information

  • Annual income
  • Net worth
  • Liquid net worth
  • Initial and ongoing sources of funding, such as gifts, a salary, or wages

An application may also require the same information about the custodian.

Investment Options

Once you have your account, you’ll need to choose how you will invest the funds in a way that matches your financial goals for your child. Consider:

  • The degree of risk for primary and secondary investments
  • The length of time for investments


You’ll also want to name beneficiaries for the account, in the event your child dies before they access the funds. You may need to provide information about a beneficiary such as their name, address, phone number, Social Security number, and relationship to the Roth IRA owner.

Frequently Asked Questions (FAQs)

How old does a child have to be to have a Roth IRA?

Roth IRAs have no age limit. If your son or daughter has taxable compensation and their income falls below the qualifying modified adjusted gross income, they can qualify.

What college expenses can I use Roth IRA funds for?

The IRS allows for early distributions for a wide range of college expenses, including tuition, books, student fees, and class equipment and supplies. Part-time and full-time students can also use Roth IRA funds to pay room and board expenses. Special needs students can use funds to pay for special needs services.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. “2021 Publication 590-A.”

  2. IRS. “Retirement Topics - IRA Contribution Limits.”

  3. Charles Schwab. “Open Custodial IRA | IRA for Children.”

  4. IRS. “Retirement Plans FAQs Regarding IRAs.”

  5. U.S. Treasury Department. “my Retirement Account.”

  6. IRS. “Publication 970 (2021), Tax Benefits for Education.”

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