A child who invests $3,000 at age 12 could see it grow for more than 50 years before retirement. That long runway is why a Roth IRA for kids can be one of the most powerful gifts a parent gives. The catch is that a child needs earned income to qualify.
This guide covers who can open a custodial Roth IRA, the 2026 rules, and how to set one up.
Key facts at a glance
| Feature | Detail |
|---|---|
| Account type | Custodial Roth IRA |
| Who manages it | A parent or guardian until adulthood |
| 2026 contribution limit | Lesser of earned income or $7,500 |
| Requirement | Child must have earned income |
| Tax treatment | Tax-free growth, qualified withdrawals tax-free |
Figures reflect IRS Notice 2025-67 as of July 2026.
What a custodial Roth IRA is
A custodial Roth IRA is a retirement account opened for a minor and managed by a parent or guardian. The adult controls the investments until the child reaches the age of majority, which is 18 or 21 in most states.
After that, the account transfers fully to the child. It follows the same IRS rules as any adult Roth IRA, with the custodian arrangement as the only added layer.
The earned income rule
A child can only contribute if they have earned income of their own. This is the single most important requirement.
Earned income can come from a formal job with a W-2, or from self-employment such as babysitting, pet sitting, lawn mowing, or tutoring. Keep simple records of the work and pay, since the contribution cannot exceed what the child actually earned.
Allowance and gift money do not count as earned income.
2026 contribution limits
For 2026, the most you can put into a child's Roth IRA is the lesser of their earned income or $7,500. If your child earns $4,000 during the year, that $4,000 is the ceiling.
The money does not have to come out of the child's own paycheck. A parent or grandparent can make the deposit, as long as the total does not top the child's earned income for the year.
This matching approach lets kids keep their earnings while still funding the account.
The tax and growth advantages
Roth IRAs grow federal tax-free, and qualified withdrawals in retirement are tax-free too. For a child with decades of compounding ahead, that tax-free growth can be substantial.
Because children usually earn little, they are almost always in a low or zero tax bracket. Paying tax now at that low rate and never again on qualified withdrawals is an efficient tradeoff.
Flexible access along the way
One feature makes a kids Roth IRA less rigid than it sounds. Contributions, meaning the original deposits, can be withdrawn at any time without taxes or penalties.
That means the account is not locked away entirely. Earnings are treated differently and generally must stay until age 59 and a half and meet the five-year rule to come out tax-free.
Some families also use contributions for college costs later, though keeping the money invested is usually the stronger long-term move.
How to open a Roth IRA for your child
Opening a custodial Roth IRA takes just a few steps. You provide your information and your child's, confirm the earned income, and fund the account.
Many brokerages that offer custodial retirement accounts let you do this online. Robinhood offers Roth IRAs with no account minimum, which keeps the starting bar low for a child with modest earnings. Terms and conditions apply, and you should confirm custodial account availability before opening.
Robinhood
Robinhood
Robinhood is a trading platform that brings stocks, ETFs, options, futures, prediction markets, crypto, and retirement accounts together in one app.
Standout feature
One platform for stocks, ETFs, options, futures, prediction markets, and crypto
Fees
$0 commission on stocks, ETFs, and options.
Pros
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Cons
Best perks (high APY, lower margin rates) require Gold subscription ($5/month)
You can also compare providers like Public, which offers retirement accounts alongside a range of investments. Checking a couple of options on fees and available funds helps you pick the best home for a long-term account.
Public
Public
Investing for those who take it seriously. Invest in stocks, bonds, options, crypto & more.
Standout feature
A 5%+ yield Bond Account paired with 3.3% APY on cash — Public is one of the only consumer apps where idle and conservative money is treated as seriously as the equity portfolio.
Fees
Free
Pros
• Invest in stocks, bonds, crypto & more• Earn 3.3% APY* on your cash with no fees• 1% match when you transfer your portfolio• Lock in a 5%+ yield with a Bond Account
Cons
Customer support is in-app and email only, no phone
Teaching kids to watch their money grow is part of the value here. A family finance tool like Monarch Money can help you and your child track contributions and see the balance build over time, which turns the account into a lesson.
Monarch Money
Monarch Money
Monarch Money simplifies personal finance by uniting all your accounts in one place—secure, ad-free, and built for couples. 50% off your first year when you sign up via Firstcard!
Standout feature
#1 rated budgeting app (WSJ). 50% off first year via Firstcard.
Fees
$14.99/mo or $99.99/yr ($8.33/mo)
Pros
Beautiful, ad-free interface (4.9★ App Store). Best budgeting app for couples and families. Comprehensive account syncing and cash flow forecasting.
Cons
No free tier — requires paid subscription.
Next steps
Start by confirming your child has documented earned income for the year. Decide how much to contribute, up to the lesser of that income or $7,500, and choose a provider that offers custodial Roth IRAs. Then set up the account, fund it, and consider a simple low-cost index fund so the money can grow with minimal upkeep.
Frequently Asked Questions
Can a child have a Roth IRA?
Yes, a minor can have a custodial Roth IRA as long as they have earned income. A parent or guardian opens and manages the account until the child reaches adulthood. At that point, control passes to the child.
What counts as earned income for a child's Roth IRA?
Earned income includes wages from a job and self-employment pay from work like babysitting, pet sitting, tutoring, or mowing lawns. Allowance, gifts, and investment income do not count. Keep records of the work and amounts earned in case they are needed.
How much can I contribute to my child's Roth IRA in 2026?
The 2026 limit is the lesser of the child's earned income or $7,500. If your child earns $2,500, that is the maximum contribution. A parent can provide the money as long as it does not exceed the earned income.
Can my child withdraw money from the Roth IRA?
Original contributions can be withdrawn at any time without taxes or penalties. Earnings generally must stay in the account until age 59 and a half and meet the five-year rule to be withdrawn tax-free. Some exceptions exist, such as for a first home or qualified education costs.
