Yes, parents can contribute to a child’s Roth IRA. The money can come from your bank account, the child’s paycheck, or both, as long as two conditions are met: the child had earned income during the year, and the total contribution does not exceed the smaller of that earned income or $7,500 for the 2026 tax year.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The account itself has to be set up as a custodial Roth IRA, with you managing it until your child reaches adulthood.
Your Child Needs Earned Income
The one rule that cannot be worked around: the child must have taxable compensation for the year the contribution covers.2Internal Revenue Service. Topic No. 309, Roth IRA Contributions That means wages from an employer reported on a W-2, or net income from self-employment work like babysitting, tutoring, lawn care, or selling goods at a market. There is no minimum age. A 14-year-old with a real job qualifies.
What does not count: allowances, birthday money, investment returns, or cash handed over without work behind it. The IRS distinguishes hard between money earned through labor and money received for other reasons. Paying your child $50 a week for their own household chores, with no genuine employment relationship, will not satisfy the requirement. The work has to be real and the pay has to be reasonable for the task.
If you own a sole proprietorship or a partnership where both partners are the child’s parents, you can employ your child directly, and the wages count as earned income for Roth IRA purposes.3Internal Revenue Service. Family Employees Keep the pay in line with what you’d offer a non-family worker for the same duties.
How Much You Can Contribute
For 2026, the maximum annual IRA contribution is $7,500.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The second cap matters more for most kids: total contributions cannot exceed the child’s actual taxable compensation for the year.4Internal Revenue Service. Retirement Topics – IRA Contribution Limits A teenager who earned $3,000 from a summer job can only have $3,000 contributed for that year, even if you wanted to put in more.
The limit is the combined total across every traditional and Roth IRA in the child’s name, not a per-account figure. The source of the cash is irrelevant. You can fund the whole contribution yourself, your child can fund it from their paycheck, or you can split it however you want. As long as the year’s total sits at or below the child’s earned income, the contribution is valid.
Overcontributing triggers a 6% excise tax on the excess for every year it stays in the account.4Internal Revenue Service. Retirement Topics – IRA Contribution Limits The fix: withdraw the excess plus any earnings it generated before that year’s tax filing deadline (including extensions), and the penalty doesn’t apply.
Opening a Custodial Roth IRA
Minors can’t enter into financial contracts, so the account is set up as a custodial Roth IRA. An adult, usually a parent, serves as custodian: you make the investment decisions and manage the account until the child reaches the age of majority. Most major brokerages offer these accounts online with no minimum balance or setup fees.
Opening the account requires the child’s full legal name, Social Security number, and date of birth, plus your own identification and Social Security number. Your child is the account owner from day one. You just manage it on their behalf.
Funding the Account
Once the account is open, contributions work like any bank transfer. Link a checking or savings account and move the money electronically, either as a lump sum or through automatic monthly transfers.
A contribution for a given tax year can be made anytime between January 1 of that year and the tax filing deadline of the following year.5Vanguard. IRA Deadlines: Why Contributing Early Matters A 2026 contribution can be made as late as April 15, 2027. If you contribute during that overlap window in early 2027, when the money could apply to either 2026 or 2027, designate the correct tax year on the brokerage form.
Contributing early in the year rather than at the deadline gives the money more time to compound. For an account that may sit untouched for decades, the extra months add up.
Keep Records of How Your Child Earned the Money
Record-keeping is where families get sloppy, and it is exactly where the IRS will look if the contribution is ever questioned. A W-2 job documents itself. Self-employment income from informal work takes more effort.
The IRS recommends keeping bank statements, payment app records, checks received, and other business income and expense records for self-employment earnings.6Internal Revenue Service. Gather Your Documents For a teenager mowing lawns or babysitting, keep a simple log showing the date of each job, the client’s name, the service performed, and the amount paid. Venmo and Zelle histories work as backup. If the child works in your business, keep timesheets and pay stubs the same way you would for any employee.
A log kept as the year unfolds is far more persuasive than one reconstructed from memory two years later.
Your Child May Have to File a Tax Return
Funding the Roth IRA itself creates no filing obligation. Contributions are not deductible and don’t appear on a return. But the earned income that makes the contribution possible can trigger a filing requirement, and this catches many families by surprise.
The biggest tripwire is self-employment income. If the child’s net earnings from self-employment reach $400 or more in a year, they must file a federal tax return and pay self-employment tax, regardless of age.7Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) A child who earns $2,000 mowing lawns won’t owe federal income tax, because the standard deduction wipes that out, but they’ll still owe roughly $283 in self-employment tax.
For W-2 wages, the threshold is higher. A dependent with only earned income generally doesn’t need to file until that income exceeds the standard deduction, which is $15,750 for the 2025 tax year.8Internal Revenue Service. Check if You Need to File a Tax Return Most working teenagers stay below that line. Either way, the child’s earned income is reported on the child’s own return, never on the parent’s.9Internal Revenue Service. Publication 501 (2025), Dependents, Standard Deduction, and Filing Information
Getting the Money Back Out
One of the strongest features of a child’s Roth IRA is that the contributions themselves can be withdrawn at any time, at any age, without taxes or penalties. Money comes out in the order it went in: contributions first, then earnings.10Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs If you contribute $7,500 a year for four years and the account grows to $35,000, your child could pull out up to $30,000, the total of what was contributed, without owing anything.
Earnings withdrawn before age 59½ normally face income tax plus a 10% early withdrawal penalty. Two exceptions line up well with a young person’s life:
- Qualified higher education expenses like tuition and fees. The 10% penalty is waived, though the earnings withdrawn are still taxed as income.11Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
- A first-time home purchase. Up to $10,000 in earnings can be withdrawn penalty-free. That amount is a lifetime cap and hasn’t been adjusted for inflation since 1997.12Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions From Traditional and Roth IRAs
A Note on Gift Tax
When you deposit money into your child’s Roth IRA, the IRS treats the transfer as a gift. The 2026 annual gift tax exclusion is $19,000 per recipient.13Internal Revenue Service. Whats New – Estate and Gift Tax Since the maximum Roth contribution is $7,500, the deposit alone won’t approach the threshold. Only worth watching if you’re also making large gifts to the same child in the same year, such as funding a 529 plan or transferring other assets.
Your Control Ends When Your Child Reaches Adulthood
A custodial Roth IRA doesn’t stay under your control indefinitely. Once your child reaches the age of majority in your state (typically somewhere between 18 and 25), the assets must be transferred into a standard Roth IRA in the child’s name. From that point forward, your child controls investment choices and withdrawals, and you have no further authority over the account. Plan the conversation before that day arrives.