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Custodial Roth IRA

Four summer jobs. $342,000 at 60. Tax-free.

The most powerful retirement account in America is the one opened at 14. A kid who earns $3,000 a summer and Roths it for four years has $13,518 by 18 — and if that money is never touched again, it's $342,548 of tax-free money at 60. No one else gets 46 years of untaxed compounding. The catch is the earned-income rule: the child must genuinely work (allowance doesn't count), and contributions are capped at the lesser of earnings or $7,500. This calculator projects the account with the real 2026 limits — and unlike a 529 or Trump Account, a Roth never touches financial aid as an asset.

Why people use this

Parents of working teens use it to see why a summer job is a retirement account in disguise — $3,000 a summer for four years becomes $342,548 tax-free at 60 — with the earned-income rule and FAFSA invisibility that neither the 529 nor the Trump Account can match.

How it works

1. Enter the child's age — contributions run until 18 in this projection.
2. Enter annual earned income: W-2 wages or real self-employment (mowing, babysitting, tutoring, the family business at market rates). Gifts and allowance don't qualify.
3. Enter the annual contribution — capped at the lesser of earned income or $7,500 (2026). A parent can supply the cash; the child just has to have earned that much.
4. Set an expected return and read the balances at 18, 25, and 60 — contributions in, decades of tax-free compounding out.

Common questions

Can I just fund my kid's Roth myself?

Effectively, yes — the rule is that contributions can't exceed the child's earned income, not that the same dollars must be deposited. If your teen earns $3,000 lifeguarding and spends it, you can gift the $3,000 contribution. What you can't do is invent income: the work must be real, at a market wage, with records (pay stubs or a log for self-employment).

Custodial Roth vs Trump Account vs 529?

Roth IRA: needs earned income, tax-free forever, FAFSA-invisible, contributions accessible — the best long-term vehicle if the child works. Trump Account: no income requirement, $1,000 seed for 2025–2028 births, but earnings are taxed as ordinary income and it counts against aid. 529: best for college specifically — tax-free for education and minimal aid impact. Working kid? Roth first. Newborn? Grab the $1,000 seed. College savings? 529.

What if my child needs the money back?

Contributions (not earnings) can be withdrawn from a Roth IRA at any time, at any age, with no tax or penalty — the Roth is far less "locked" than people think. Earnings withdrawn before 59½ face tax plus a 10% penalty unless an exception applies (education, first home up to $10,000, disability). One caution for college years: Roth withdrawals count as student income on a future FAFSA even though the account itself is invisible as an asset.

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