By Harry Prabandham · Updated September 27, 2026
Retirement Planning
Custodial Roth IRA: Retirement Savings for Minors
A custodial Roth IRA is a Roth IRA for a minor with earned income, run by an adult until the child takes control; 2026 contributions cap at $7,500.
Custodial Roth IRA: Retirement Savings for Minors
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The short answer
- A custodial Roth IRA is a Roth IRA owned by a minor and managed by a parent or guardian until the child reaches adulthood.
- The child must have earned income, and contributions cannot exceed that income or the 2026 IRA limit of $7,500.
- Contributions go in after tax; qualified withdrawals after age 59½, once the account is five years old, are federally tax-free.
- There is no minimum age, but the income must come from real work at a reasonable rate of pay.
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Full Guide
The short answer
- A custodial Roth IRA is a Roth IRA owned by a minor and managed by a parent or guardian until the child reaches adulthood.
- The child must have earned income, and contributions cannot exceed that income or the 2026 IRA limit of $7,500.
- Contributions go in after tax; qualified withdrawals after age 59½, once the account is five years old, are federally tax-free.
- There is no minimum age, but the income must come from real work at a reasonable rate of pay.
What counts as earned income for a child?
- Wages from a job, or self-employment income from work like babysitting, tutoring, or lawn care, can qualify.
- Pay from a family business counts when the work is real and the pay is reasonable for the tasks performed.
- Allowances, gifts, and investment income do not count as earned income.
- Keep a simple record of dates, tasks, and payments, since the IRS can ask how the income was earned.
How much can a minor contribute in 2026?
- The limit is the lesser of the child's earned income for the year or $7,500 for 2026.
- A parent or grandparent can fund the contribution, as long as the child earned at least that amount.
- Contributions for a tax year can be made until the tax-filing deadline the following April.
- A child who earns more than the standard deduction, or has $400 or more of self-employment income, may need to file a return.
Who controls the account, and when does that change?
- The custodian opens the account, chooses investments, and makes decisions on the child's behalf.
- Money in the account belongs to the child and must be used for the child's benefit.
- Control passes to the child at the age set by state law and the custodian's rules, often 18 or 21.
- After that, the young adult can invest, hold, or withdraw the money as they choose.
How does it compare with a Trump account?
- Trump accounts, created by the July 2025 tax law, could not receive contributions before July 4, 2026.
- They do not require earned income, and contributions from family and others are capped at $5,000 a year in total.
- They follow traditional IRA-style rules, so growth is generally taxable when withdrawn, unlike qualified Roth withdrawals.
- Some families may use both; the right mix depends on the child's income and the family's goals.
Trade-offs to weigh
- Roth contributions, but not earnings, can be withdrawn at any time without tax or penalty, which adds flexibility.
- Retirement account balances are not reported as assets on the FAFSA, but withdrawals can count as income for aid.
- The account passes fully to the child at the age of majority, with no legal way to restrict how it is used.
- Investments can lose value, and a long horizon does not remove the risk of loss.
Key takeaways
- A custodial Roth IRA gives a young worker an early start on tax-free growth, limited by what they actually earn.
- Documentation of real, reasonably paid work is the foundation; without earned income, contributions are not allowed.
- Newer Trump accounts do not need earned income but have different tax treatment.
- Rubric Advisors does not prepare tax returns; confirm earned-income and filing questions with a CPA.
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