Opening a Roth IRA for your child allows them to start building tax free retirement savings from an early age. As long as they have earned income, contributions can grow and compound for decades, completely tax free. Follow these steps to set it up correctly and ensure it meets IRS requirements.

Disclaimer: The information provided in this document is for general educational purposes only and is not intended as financial, legal, or investment advice. While efforts have been made to ensure accuracy, laws and regulations may change. You should consult with a qualified financial advisor, before making any financial decisions. No client relationship is created by your use of this material.

Step 1: Open a Custodial Roth IRA

  • Providers include Fidelity, Charles Schwab, Vanguard, and others.
  • Search for "Custodial Roth IRA" or "Kids Roth IRA"
  • You (the custodian) manage the account until your child reaches the age of majority in your state (usually 18 or 21), at which point it transfers to their control.

If the earned income comes from working in your practice or real estate business, keep the payroll records and timesheets described in our Paying Your Kids Through Your Business guide; they are what proves the earned income behind the Roth contribution.

Information Needed:

  • Parent and child's Social Security numbers
  • Child's earned income documentation (e.g., W2)
  • Custodian information (parent or guardian)
  • Funding source (bank info)

Step 2: Fund the Roth IRA

  • This Roth can be funded directly from your child's personal checking account or directly from your (or another person's) bank account on their behalf.
  • Contributions cannot exceed the smaller of the child's earned income for the year or the IRA limit ($7,500 for 2026). Earned income means wages or self-employment income the child actually worked for; allowance, gifts, and investment income do not count.

Step 3: Investing in the Roth IRA

  • Once funded, the contributions can then be invested.

Some popular options for kids include:

  • Target Date Retirement Funds (e.g., 2065 or 2070)
  • S&P 500 Index Funds
  • Total Stock Market Funds