Custodial Roth IRA Rules and Contribution Limits (2026)

A custodial Roth IRA follows the same IRS rules as an adult Roth IRA. The child needs earned income, and for 2026 the contribution cap is $7,500 or the child’s earned income, whichever is less. Below are the seven rules, plus the tax-filing rules that sit beside them.

New to the account? Start with what a custodial Roth IRA is. Ready to open one? See how to open a custodial Roth IRA.

Rule 1 — Earned income is the gate

The child must have earned income in the contribution year: W-2 wages, 1099 self-employment income, documented cash work (babysitting, lawn mowing), or paid work in a family business. Allowance, birthday money and investment returns are unearned income and don’t qualify.

So can a child with no income have a Roth IRA? No. A child with no earned income can’t contribute to a Roth IRA, custodial or not, because the IRS caps contributions at the child’s taxable compensation for the year. A UTMA, a 529 or a Trump account can take contributions without earned income.

Rule 2 — The 2026 contribution limit

The cap is whichever is lower:

• The standard annual Roth IRA limit — $7,500 in 2026, or
• The child’s total earned income for the year

A kid who earned $2,000 can contribute up to $2,000. A teen who earned $9,000 caps out at $7,500. (The Roth income phase-out for high earners technically applies too, but almost never matters at a child’s income level.)

Rule 3 — Anyone can supply the dollars

The contribution doesn’t have to come from the child’s own paycheck. A parent or grandparent can fund the account while the kid keeps their earnings — the IRS only requires that earned income existed in an amount at least equal to the contribution.

Rule 4 — The contribution deadline

Contributions for a tax year can be made until the following year’s tax-filing deadline, typically mid-April. Summer-job earnings can still be matched the next spring.

Rule 5 — No minimum age

There is no age floor. A baby with legitimate earned income (modeling is the classic case) can have a custodial Roth IRA. Age only matters at the other end — the handoff (Rule 7).

Rule 6 — The withdrawal rules

• Contributions come out any time, tax- and penalty-free. The dollars put in are always accessible — one reason the account is more flexible than its “retirement” label suggests.
• Earnings are the locked part. Withdrawing growth before age 59½ generally means income tax plus a 10% penalty.
• The exceptions: up to $10,000 of earnings toward a first home (tax- and penalty-free if the account is 5+ years old), and qualified education expenses (penalty-free, though the earnings are still taxed).
• Fully tax-free: qualified withdrawals after 59½, once the account has been open five years.

Inside the account, growth isn’t taxed at all — which also means the kiddie tax that applies to a UTMA’s dividends and gains simply doesn’t apply here.

Rule 7 — Control transfers at the age of majority

You manage the account as custodian until your child reaches the age of majority (18 in most states, 21 in a few). Then it converts to a regular Roth IRA they fully control — including the right to withdraw contributions. The preparation for that day is covered in What Happens When Your Child Turns 18.

The tax-filing side rules

• A dependent child with earned income over the standard deduction ($16,100 in 2026) must file a tax return.
• Self-employment income over $400 triggers a self-employment-tax filing requirement regardless of total income.
• Contributing more than the child’s earned income is an excess contribution, subject to a 6% IRS excise tax each year until corrected — keep a simple log of the work and pay behind every year’s contribution.
• On the FAFSA, retirement accounts — including a custodial Roth IRA — are generally not reported as a student asset, making it one of the more aid-friendly accounts you can open for a kid.

Frequently asked questions

What are the custodial Roth IRA contribution limits for 2026?

$7,500 or the child's total earned income for the year, whichever is less. A child who earned $2,000 can contribute up to $2,000; a teen who earned more than $7,500 caps out at the $7,500 limit.

Can I contribute more than my child earned?

No. Contributions above the child's earned income are excess contributions, subject to a 6% IRS excise tax each year until removed. The earned-income figure is the hard ceiling, even when the dollars come from a parent.

Can a child with no income contribute to a Roth IRA?

No. A child with no earned income can't contribute to a Roth IRA, custodial or not, because the IRS caps contributions at the child's taxable compensation for the year. Allowance, even chore-based allowance, gifts and investment returns don't count. A UTMA, a 529 or a Trump account can take contributions without earned income.

When is the contribution deadline?

The following year's tax-filing deadline, typically mid-April. Contributions made in the spring can be designated for the prior tax year.

Can my kid withdraw money from a custodial Roth IRA?

Contributions can come out at any time, tax- and penalty-free. Earnings withdrawn before 59½ generally incur tax plus a 10% penalty, with exceptions for a first home (up to $10,000) and education expenses. After the age of majority the account is theirs, and those same IRS rules keep applying.

Is there an income limit on a custodial Roth IRA?

The same Roth IRA income phase-out that applies to adults technically applies, but a child's income is almost never high enough for it to matter. The binding limits are earned income and the annual contribution cap.

The bottom line

Seven rules: earned income gates it, the cap is the lesser of earnings or $7,500, anyone can fund it, the deadline is tax day, there’s no minimum age, contributions stay accessible while earnings lock until 59½, and the whole thing becomes your kid’s at the age of majority. Follow those and the account does what nothing else in a kid’s financial picture can: decades of tax-free compounding, with qualified withdrawals in retirement coming out tax-free too.