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Now is the perfect time to consider opening Roth IRAs for your minors.


Roth IRAs allow you to make after-tax contributions instead of pretax contributions. Pretax contributions can be those you make with your own IRA or your employer’s 401(k). It’s important to create your account as a Roth IRA when set up, even though Regular and Roth IRA’s are similar.

A Roth IRA is subject to the same rules that apply to a traditional IRA with the following exceptions:

  • You cannot deduct contributions to a Roth IRA.
  • If you satisfy the requirement’s, qualified distributions are tax-free.
  • For 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs.
  • You can leave amounts in your Roth IRA as long as you live.
  • When creating your account or annuity, create it as a Roth IRA.


Minors generally cannot open brokerage accounts in their own name until age 18. As such, it requires an adult to serve as custodian. Therefore, you can also refer to a minors IRA as a custodial Roth IRA account or a Roth IRA for Kids. No matter which names it uses, the benefits are the same as a regular Roth IRA.

Here’s how it works:

The custodian opens and maintains control of the minor child’s Roth IRA. In which case, the custodian makes all the decisions; contributions, investments, and distributions. They receive account statements as well.

As the custodian, parents should remember that while they control and maintain the account, it belongs to the minor child. You must use the account funds for the benefit of the minor. When they reach the age of 18 or 21, depending on the state, you need to transfer the assets to a new account in their name.

Earned Income. 

A minor can only contribute to a Roth IRA if they have earned income from a summer or after-school job. As a reminder, self-employment earnings of $400 or more may be subject to self-employment taxes such as Medicare and Social Security.

Teens should keep a log of hours worked, in case the IRS contacts them with questions even though they are not required to file a tax return.


 For 2022, that maximum contribution to a Roth IRA is the lesser of $6,000 or the total of the child’s earned income. For example, if your child earns $3,000 this year, the maximum contribution is $3,000 (not $6,000). Parents can add funds to their child’s account as long as the total contribution amount (child and parent) does not exceed the amount of earned income your child made this year. Using the example above, if the child earned $3,000 but only wanted to contribute $1,500 to their Roth IRA, the parent could contribute an additional $1,500.

Contributions can be withdrawn penalty and tax-free at any time. You don’t need to wait until age 59 1/2. Even if your child makes a one-time contribution today, the earlier they start saving, the more time their money has to grow, thanks to the power of compounding.


While your teen might not see the point of contributing to a retirement account now, they will thank you later. If you have questions about Roth IRAs for minors, don’t hesitate to contact the office.

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