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Roth IRA for Kids (2026): Rules, Benefits and How to Open One

Give your child a head start with tax-free investing that can grow for decades.

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Matt Miczulski

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Holly Jennings

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Opening a Roth IRA for a child might be one of the most powerful financial moves you can make.

Because of compound growth and tax-free withdrawals, even small contributions early in life can grow into a significant retirement fund — potentially worth hundreds of thousands of dollars over time.

If your child has earned income, you can open and manage a custodial Roth IRA on their behalf and start investing today.

Not sure if this is the right account? Compare all your options in our guide to investing for kids.

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Can a child have a Roth IRA?

Yes — as long as your child has earned income, you can open a custodial Roth IRA and manage it until they reach adulthood.(1)

  • Who qualifies: children with earned income (W-2 or self-employment)
  • Contribution limit: up to $7,500 per year or total earned income, whichever is less
  • Account owner: the child (not the parent)
  • Who manages it: a parent or guardian until the age of majority
  • Main benefit: tax-free growth and withdrawals in retirement

What is a custodial Roth IRA?

A custodial Roth IRA is a retirement account opened for a minor but managed by an adult — allowing kids to start building tax-free wealth decades before most people even open their first IRA.

The child is the legal owner of the account, but the parent or guardian acts as the custodian, making contributions and managing investments until the child reaches adulthood.

It works similarly to a custodial brokerage account, but with the added benefit of tax-free growth and retirement-focused rules.

Why starting early matters

Time is the biggest advantage your child has when investing.

Let’s say your child contributes $3,000 per year from age 15 to 18 — a total of $12,000.

If those investments grow at an average 7% annual return, that $12,000 could grow to over $150,000 by retirement — even if they never contribute another dollar.

The earlier they start, the more time compounding has to work.

Custodial Roth IRA rules

Custodial Roth IRAs follow the same rules as standard Roth IRAs, with a few key considerations for minors:

  • Your child must have earned income for the year.
  • Contributions cannot exceed their earned income.
  • The annual contribution limit applies ($7,500 for 2026, subject to IRS updates).
  • A parent or guardian must manage the account.
  • The child gains full control at the age of majority (18 or 21 depending on the state).

According to IRS rules, contributions must come from earned income such as wages or self-employment income.(2)

How to open a Roth IRA for your child

Opening a custodial Roth IRA is similar to opening a brokerage account, but with a few extra steps.

  1. Choose a broker: Not all platforms offer custodial IRAs. Look for established brokers like Fidelity, Schwab or Vanguard
  2. Complete the application: You’ll need both your information and your child’s details, including Social Security number
  3. Fund the account: Contributions must match your child’s earned income
  4. Select investments: Most parents start with low-cost index funds or ETFs

What should a child invest in?

For most kids, simple and diversified investments are the best place to start.

Many parents choose broad market index funds or ETFs because they spread risk across many companies and require little ongoing management. This approach focuses on long-term growth rather than short-term performance.

If you prefer a more hands-off strategy, you could also consider robo-advisors, which automatically manage a diversified portfolio.

Benefits of a Roth IRA for kids

  • Tax-free growth: Investments grow without being taxed, which can significantly boost long-term returns over decades.
  • Tax-free withdrawals: Qualified withdrawals in retirement are tax-free, helping your child keep more of what they earn.
  • Long-term compounding: Starting early gives investments decades to grow, which is where Roth IRAs really shine.
  • Flexible contributions: Contributions (not earnings) can be withdrawn anytime, offering some flexibility if plans change.
  • Financial education: Helps kids learn how investing works and builds strong money habits early.

When a Roth IRA may not be the best option

A Roth IRA can be powerful, but it’s not always the right choice.

If your child doesn’t have earned income, they won’t qualify. And if your primary goal is saving for education, a 529 plan may be a better fit due to its education-specific tax benefits.

For more flexibility, some families prefer a custodial brokerage account, which doesn’t have the same contribution restrictions.

If your goal is to help your child learn how to invest, consider investing apps for teens, which are designed for hands-on experience.

Bottom line

A Roth IRA for kids is one of the most powerful tools for building long-term wealth.

If your child has earned income, starting early gives them decades of tax-free growth and a major financial head start.

Not sure if a Roth IRA is the best option? Compare all your options in our guide to the best investment accounts for kids.

Frequently asked questions

Sources

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To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.
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Investments editor and market analyst
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Matt Miczulski is an investments editor and market analyst at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions. Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on Yahoo Finance, CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. See full bio

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Matt has written 283 Finder guides across topics including:
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