Roth IRA for Kids: Your Questions, Answered

The custodial Roth IRA questions parents ask most — answered directly, with the deep dives linked when you want the full story.

Can a child have a Roth IRA?

Yes — there is no minimum age for a Roth IRA. The only requirement is that the child has earned income: money from actual work, whether W-2 wages or self-employment like babysitting and lawn mowing. Because minors cannot open brokerage accounts on their own, a parent opens a custodial Roth IRA, manages it, and hands over control at the age of majority (18 or 21, depending on the state).

What counts as earned income for a child’s Roth IRA?

Wages from a W-2 job, and legitimate self-employment income: babysitting, pet-sitting, lawn mowing, tutoring, reselling, and similar work. Gifts, allowance, and investment earnings do not count. Self-employment income generally has to come from work done for people outside your own household — paying your child for ordinary chores does not create earned income.

If you own a business and want to put your child on the payroll, that is a legitimate strategy covered in Hiring Your Child in the Family Business, but it comes with its own rules:

• the work must be real,
• the pay must be reasonable for the job,
• and it has to be documented like any other employee.

For cash work, keep a simple written log of dates, payers, and amounts — every contribution has to be backed by real, documentable earnings. Our free Children/Self-Employed Paycheck Tracker is built for exactly this.

How much can a minor contribute to a Roth IRA?

The lesser of the child’s total earned income for the year or $7,500 (the 2026 IRA limit). A teen who earned $3,000 over the summer can contribute up to $3,000; a teen who earned $9,000 can contribute up to $7,500. The dollar limit is adjusted for inflation most years, so check the current figure each January before you fund the account.

Does the money have to come from the child’s own paycheck?

No. As long as the child earned the contributed amount during the year, the dollars can come from anyone — a parent, a grandparent, anyone. Many families run a parent match: the child keeps their spending money, or half of it, while the family funds the Roth up to what the child earned that year. One caution — a full match gets expensive once the child starts earning real W-2 wages, so it’s worth instilling the habit of saving a share of their own earnings early rather than funding all of it for them. Calling it a “match” is the point: you are teaching them how a 401(k) employer match works about ten years before their first employer offers one. You can also teach them how their first 401(k) will work, years before they have to make that decision without you.

Will a Roth IRA hurt my child’s financial aid?

No. Retirement accounts, including a custodial Roth IRA, are not reported as assets on the FAFSA. One caution: withdrawals taken from the account can count as income on a later FAFSA, so leave the money invested during college.

What if my child needs the money before retirement?

Contributions (the dollars put in, not the growth) can be withdrawn at any time, at any age, tax- and penalty-free. That makes the account far less locked up than most parents assume — although the entire point is to leave it compounding.

Keep a running record of how much has been contributed each year, separate from what the account is worth. That contribution total is the amount that can always come out penalty-free, and it is the number families lose track of as kids grow up and accounts get moved between brokerages. Your custodian files IRS Form 5498 every year showing contributions — save those, and log the year, the amount contributed, and the year-end balance in the same earnings tracker you use to document your child’s earned income.

Where should we open a custodial Roth IRA?

Fidelity, Charles Schwab, and Vanguard all offer custodial Roth IRAs with no account minimums and no maintenance fees. Open it, fund it up to the child’s earnings, and put the money in a low-cost total-market or S&P 500 index fund.