Can I open a Roth IRA for my kids?
So far, we've discussed why you might want to contribute to a Roth IRA for your kids. But whether parents can contribute to a Roth IRA for a minor is another issue.
There are a couple of basic requirements that need to be met before Americans can contribute to a Roth IRA:
- First, the minor's income needs to be below a certain limit. As you can probably imagine, this is typically not an issue for children. But for the 2025 tax year, the IRS income limit to make a Roth IRA contribution is $165,000 for single tax filers. The limit will increase to $168,000 in 2026. (Note: You can make Roth IRA contributions for each tax year until the tax deadline. In other words, 2025 contributions can be made until April 15, 2026.)
- Second, the annual contribution limit for a minor's Roth IRA is the lesser of the standard annual contribution limit or their total earned income. Earned income means money from a job or a business you actively participate in -- not interest income, dividends, or other passive sources. This is the requirement that is typically the roadblock for children, especially those without jobs.
It's important to emphasize that it doesn't necessarily need to be your child's money that is contributed; in other words, as long as your child has enough earned income to justify it, there's no reason you can't make a Roth IRA contribution on your kid's behalf or match some of the money he or she contributes.
What if my child doesn't meet the income requirement?
One of the requirements, as previously mentioned, is earned income. But that does not mean your child necessarily needs to have formal employment. Self-employment income also qualifies as long as it's reported to the IRS.
For example, if your 14-year-old child earns $1,000 mowing lawns in the summer, this income could potentially be used as the basis for qualifying for IRA contributions. Other potential qualifying income sources are babysitting and even chores they do for pay.
(Note: I am not a tax professional, and if you're worried about the legality of counting your child's income for IRA purposes, be sure to consult one.)
One caveat is that if you use self-employment income as a basis for qualification, your child may also have to pay self-employment tax on his or her reported income. Even if this is the case, the long-term benefits of Roth IRA investment at such a young age can more than offset this expense. And, according to the IRS, if your kid earns more than $400 for the year, he or she should be reporting self-employment income anyway.
How do I open a Roth IRA for my kids?
If you're ready to take the next steps, find a brokerage that offers Roth IRAs and fill out an account application. You may need to serve as custodian of the account until your child turns 18 since brokerages generally don't allow minors to open their own accounts. At least one broker, Fidelity, has introduced a kid-focused Roth IRA product to make the process as easy as possible for parents, but others are happy to offer Roth IRAs for minors as well.
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