Roth IRA for Kids Calculator

Why a Roth IRA at any age is wild

Compounding\'s power is well-known but still hard to feel. A kid contributing $100/month starting at age 14 has 51 years of compounding before standard retirement. At an 8% inflation-adjusted return, that\'s about $760,000 at age 65 — from a kid\'s babysitting and lawn-care money.

The same person starting at 25 with the same $100/month ends up with about $290,000. The 11-year head start more than doubles the result. That\'s the lesson.

Who can open a Roth IRA for a kid?

Any parent or guardian can open a custodial Roth IRA for a minor with earned income. The kid\'s name is on the account; the parent manages it until the kid reaches the age of majority (18 or 21 depending on state). After that, the account becomes fully theirs.

Major brokerages that offer custodial Roths: Fidelity (no minimums, no fees), Charles Schwab (no minimums), Vanguard (no minimums for ETFs), E*TRADE. Avoid robo-advisors that charge a percentage at this small balance.

What counts as earned income for a kid?

The kid must have earned income to contribute. Allowance does not count.Babysitting, lawn-mowing, dog-walking, tutoring, paid chores from non-family, and W-2 jobs all count. The IRS doesn\'t require a 1099 or W-2 for the cash income, but you should document what they earned and from whom in case of audit.

The contribution limit is the lesser of (a) the kid\'s earned income for the year or (b) the standard Roth limit ($7,000 in 2025). So a 14-year-old who earned $2,400 babysitting can contribute up to $2,400. Many parents fund the contribution as a "match" — the kid earns it, the parent puts the money in.

The "match the contribution" parent strategy

A common structure: the kid keeps their earnings to spend, and the parent funds the Roth contribution out of family money up to the kid\'s earned-income amount. This is legal — the IRS only cares that the kid had earned income equal to the contribution. Where the cash for the contribution actually came from is irrelevant.

Result: the kid keeps their summer-job money, the parent puts $2,400 in a Roth, and 51 years later the parent\'s $2,400 is worth $200,000+ in the kid\'s retirement account. Hard to beat that gift.

Roth vs. Traditional for a kid

Always Roth. A kid\'s tax bracket is 0% (they earn well below the standard deduction). Roth contributions go in tax-free, grow tax-free, and come out tax-free in retirement. That\'s the closest thing to a financial cheat code in US tax law.