Roth IRA for Grandchildren: How a Grandparent Can Fund One

Yes, you can fund a Roth IRA for your grandchild, but only as a custodial Roth IRA in the grandchild's name, and only if they have earned income from real work. You can't open a Roth IRA in your own name for them. For 2026, the yearly cap is $7,500 or the grandchild's earned income, whichever is less.

Whether you can also be the custodian depends on the provider. Many accept any adult, grandparents included, while some ask for a parent or legal guardian.

Does your grandchild need a job?

Yes. A grandchild with no earned income can't receive a Roth IRA contribution, custodial or not, because contributions are capped at their taxable compensation for the year.

Wages from a summer job count. So does self-employment money from babysitting, lawn mowing or tutoring. Allowance, gifts and investment income don't. (More on what counts: a teen's first job and the custodial Roth.) If there's no earned income yet, see the other options at the end of this page.

How much can a grandparent put in?

Up to the lesser of the grandchild's earned income or the annual limit, which is $7,500 for 2026. If your grandchild earned $2,000 babysitting, $2,000 is the ceiling.

That cap covers everyone together. If a parent puts in $1,500 and you put in $1,000, the total of $2,500 has to fit inside what the grandchild earned. So agree on amounts with the parents before anyone deposits.

Who can be the custodian?

The custodian manages the account until your grandchild reaches the age of majority, then steps aside. It's most often a parent. Some providers let a grandparent serve, and some require a parent or legal guardian, so check with the provider before you plan around it.

How the money gets in

A grandparent can fund the account whoever the custodian is. The usual ways:

• You're the custodian. You open the account and contribute directly.
• A parent is the custodian. You give the money to the parent, who deposits it, or you deposit directly if the provider accepts contributions from someone other than the custodian.
• Matching. Your grandchild keeps what they earned, and you give an amount up to their earnings for the Roth. That's fully allowed, since the IRS only limits the total, not whose dollars it is.

Keep a copy of the earned-income record for each year you contribute. Usually the parents have it, since they help with the grandchild's taxes. Step-by-step setup is in how to open a custodial Roth IRA.

Is it a taxable gift?

It's a gift, but in practice it won't cost you gift tax. For 2026 you can give each person up to $19,000 a year without filing a gift-tax return, and a Roth contribution can't go above $7,500.

The Roth gift counts toward that $19,000 together with anything else you give the same grandchild that year, such as a 529 deposit. A gift-tax return is needed only when the total to one person goes over $19,000, and even then tax is rare. The mechanics are in gift tax and custodial accounts.

Why grandparents like this account

• Time. A grandchild has decades before retirement, which is when tax-free growth matters most.
• It's theirs. The account is in your grandchild's name and passes to their control at adulthood.
• It rewards work. Matching what a grandchild earns ties the gift to the habit of earning.

If your grandchild has no earned income yet

A custodial brokerage account or a 529 can take money now, with no income needed. Compare them in saving and investing for grandchildren and grandparent 529 vs. UTMA.

Where MemoryBank fits

Once the Roth is open, the family can connect it in MemoryBank, and your grandchild sees it on their own kid-friendly dashboard. Co-parents can be invited too.

MemoryBank is not a brokerage. It cannot receive, keep or transfer securities. This page explains how the account works, not what to invest in. For tax questions, talk with a tax professional or financial advisor.

Frequently asked questions

Can I open a Roth IRA for my grandchild?

Yes, as a custodial Roth IRA in the grandchild's name, if the grandchild has earned income from real work. You can't open one in your own name for them. Whether you can be the custodian depends on the provider: many accept any adult, and some require a parent or legal guardian.

Can a grandparent contribute to a grandchild's Roth IRA if the grandchild has no income?

No. A grandchild with no earned income can't receive a Roth IRA contribution, custodial or not, because contributions are capped at their taxable compensation for the year. A custodial brokerage account or a 529 can take money without earned income.

How much can a grandparent contribute to a grandchild's Roth IRA?

Up to the lesser of the grandchild's earned income for the year or the annual limit, which is $7,500 for 2026. That cap covers all contributors together, so parents and grandparents share it.

Can a grandparent be the custodian of a custodial Roth IRA?

It depends on the provider. Some let any adult, including a grandparent, be the custodian; others require a parent or legal guardian. Either way, a grandparent can supply the money.

Is funding a grandchild's Roth IRA a taxable gift?

It's a gift, but it won't usually cost gift tax. For 2026 you can give each person up to $19,000 a year without filing a gift-tax return, and a Roth contribution is capped at $7,500. It counts toward the $19,000 along with other gifts to that grandchild.

What to do this week

1. Ask the parents whether your grandchild had earned income this year, and how much.
2. Agree who will be the custodian and how much each of you will put in.
3. Check that the provider offers a custodial Roth IRA and whether it accepts a grandparent as custodian.