Can My Kid Open a Roth IRA?
Roth IRA for Kids
A teenager with a summer job has something most adults would envy: decades of time for money to grow, and a tax rate near zero. A Roth IRA puts the two together. Here's who can open one, how much can go in, and how parents and grandparents can help.
Why start so young?
Two reasons. Time: money put in at 16 has nearly 50 years to grow before retirement. Taxes: most teenagers owe little or no income tax, so paying tax now, which is how a Roth works, costs them almost nothing, and qualified withdrawals in retirement are tax-free.
Our free Roth IRA for Kids calculator shows the difference. For example, $1,000 a year for five years starting at 16, growing at an assumed 6% a year, could grow to more than twice as much by 65 as the same $5,000 put in starting at 30: about $77,000 versus about $34,000. That’s an illustration, not a promise: real returns vary, and markets go down as well as up.
Who can open one
Any child, at any age, as long as they have earned income: pay from work, not an allowance or gifts. That includes:
- A part-time or summer job with a paycheck.
- Self-employment, like babysitting, lawn mowing or pet sitting. Keep a simple record of who paid, when and how much.
- Work in a family business, as long as the pay is reasonable for the work actually done.
Because a minor can’t open an account alone, a parent or guardian opens a custodial Roth IRA and manages it until the child reaches the age of majority in your state, usually 18 or 21. Then it becomes theirs.
How much can go in
Each year, a child can contribute up to what they earned from work that year, or the annual IRA limit, whichever is less. For 2026 the limit is $7,500.
A teen who earns $2,000 over the summer can put in up to $2,000. A teen who earns $9,000 can put in up to $7,500.
How parents and grandparents can help
The dollars that go in don’t have to be the exact dollars the child earned. They just can’t add up to more than the child’s earnings for the year. That opens up some good options:
- Match what they save, the way an employer matches a 401(k). Put in a dollar for every dollar they save, up to a limit.
- Gift the contribution so they can keep their paycheck for now, and still get the head start.
- Grandparents can help too. It’s a meaningful gift that can grow for decades. Gifts count toward the giver’s annual gift tax exclusion, which is far above IRA limits for most families.
It pairs well with teaching the habit. How Do I Teach My Kids About Money? covers Spend, Save, Give, and matching is one of the best ways to make saving pay off for a spender.
What if they need the money sooner?
A Roth IRA is built for retirement, but it’s more flexible than most people think:
- Contributions (the money put in) can be taken out at any time, without tax or penalty.
- Earnings generally can’t come out tax-free and penalty-free until age 59½ and after the account has been open five years. Some exceptions apply, such as up to $10,000 of earnings toward a first home.
For college, a Roth IRA and a 529 plan each have trade-offs. 529 vs. Roth IRA walks through which does what.
A good first conversation
If you’d like to open one for a child or grandchild, or talk through how it fits with your own plan, we’re always glad to help.
Sources
- Internal Revenue Service, Publication 590-A, Contributions to Individual Retirement Arrangements. Earned income requirement and contribution limits.
- Internal Revenue Service, Publication 590-B, Distributions from Individual Retirement Arrangements. Withdrawal of contributions, qualified distributions and the first-home exception.
- Internal Revenue Service, Notice 2025-67. The $7,500 IRA contribution limit for 2026.
- Nothing on this page is a recommendation to buy, sell or hold any security, or tax advice about your particular situation.
Quick answers
- Can a child have a Roth IRA?
- Yes, at any age, as long as they have earned income from work, such as a part-time job, babysitting or mowing lawns. A parent opens and manages it as a custodial Roth IRA until the child reaches the age of majority in their state.
- How much can my child put in a Roth IRA?
- Up to what they earned from work that year, or the annual IRA limit, whichever is less. For 2026 the limit is $7,500. A teen who earns $2,000 over the summer can contribute up to $2,000.
- Can parents or grandparents fund a child's Roth IRA?
- Yes. The money put in doesn't have to be the same dollars the child earned, as long as the total stays within what they earned that year. Many families match part of what a teen saves, or gift the full amount so the teen can keep their paycheck.
- Can my child take money out of a Roth IRA before retirement?
- Contributions can be withdrawn at any time without tax or penalty. Earnings generally can't come out tax-free and penalty-free until age 59½ and after the account has been open five years, with some exceptions, such as up to $10,000 toward a first home.