Roth IRA for Children

If your child has taxable earned income and qualifies, a Roth IRA can be a great way to get them started on investing for retirement. This is the case for several reasons.

Like Roths for adults, money in a Roth IRA for children grows tax free. Since the majority of kids have very low earned incomes, they’re probably paying little or no taxes on that income anyway. In that case, a Roth can be even more beneficial because it’s likely that most or ALL of the money added to the Roth will be tax free.

Keep in mind though that money in your kid’s IRA is their money. You can’t legally force them to use it only for retirement.

The only catch with opening a Roth for children is that there aren’t very many brokerages that allow you to do so. I don’t know if that’s because the number of people who want to open Roths for kids is low, or if there’s some other reason that makes brokerages shy away from offering them.

You may have to do a little searching around, but I was able to open one for my son at Scottrade though while he was a minor, so there are definitely some places you can open one. You’ll just need to ask if they allow people to open a Roth IRA for kids.

Once you find a broker you’d like to go with and get the IRA opened, you can use it as an opportunity to teach your children the value of saving for retirement — and of not touching that money until retirement.


  • I think it is shear numbers! The number of children who would qualify is not enough especially if you consider how many would want it.

    • True, I bet there aren’t many people who take advantage of this option, even though it’s got a lot of advantages.

  • We know of many brokerages that will open a custodial Roth IRA account.

    Also, we show kids how they can earn money to invest in their Kid IRA as well!

  • I wrote about this as well. Schwab set up a custodial Roth account, my daughter made some nice money over the summer. Never too soon to start saving for retirement. She will graduate college with more in her Roth than the average person has in their retirement account.

  • Jeffrey

    It took some effort because such things weren’t advertised, but I was able to open Roth accounts with Vanguard for my girls while they were in high school in the 90s. It was worth the effort, though, to show my girls how serious about saving for retirement I was.

  • One of the qualities of a Roth for kids (or even young adults) is that they can withdraw their contributions without tax consequences, prior to retirement. Sure, no one wants their kids to withdraw the money from a retirement account–retirement accounts should be specifically for retirement. But in the decades between youth and retirement, life will be happening it it costs money. A Roth is a nice option to have for that purpose.

    Another still is that as a parent, if you’re child has their money going into a Roth you won’t have to be concerned with the prospect of having to pay the “kiddie tax” on their investment income.

  • phil

    can I just make a deposit into our children roth ira ‘s. our sons have them now, and are both near 30…..i’d like to make depoosit into their roths…please advise & thanks

    • You know, I’m not sure. I would check with someone who knows your situation better and possibly the IRS. But in general they would have to have earned income and qualify for a Roth, then in theory you could give them money and they could contribue what they wanted to their Roth.