Quick Answer
Yes — ITIN holders can open a custodial Roth IRA for a child who has earned income. Contributions grow completely tax-free, and withdrawals in retirement are tax-free too. To open one:
- Confirm earned income: The child must have wages or self-employment income — contributions cannot exceed what they earned that year.
- Open the account: Open a custodial Roth IRA at Fidelity, Vanguard, or Schwab — the child is the account owner; you manage it until they reach the age of majority (18–21 depending on your state).
- Contribute: Up to the lesser of the child’s earned income or the annual IRA contribution limit ($7,500 in 2026, up from $7,000 in 2025).
What Is a Custodial Roth IRA?
A custodial Roth IRA is a retirement account a parent opens and manages for a minor — the child is the legal owner, with the adult as custodian until majority (18–21 by state). With 31 million ITINs issued since 1996 (TIGTA, 2026), immigrant families increasingly use this to build tax-free generational wealth starting in childhood.
A Roth IRA is funded with after-tax dollars. The money inside grows completely tax-free, and when the child withdraws it in retirement (after age 59½), they owe no federal income tax on either the contributions or the earnings. For a 10-year-old investing today, that means potentially 50+ years of tax-free compounding — one of the most powerful financial tools available to any family.
The account works exactly like any Roth IRA — same IRS rules, same brokerages, same investment options. The only difference is the "custodial" structure that gives an adult legal control until the child is old enough to manage it independently. See the full IRS Roth IRA rules for details.
How Does a Custodial Roth IRA Work?
The mechanics are straightforward: the child earns money, you contribute up to that amount (capped at $7,500 in 2026) to the Roth IRA on their behalf, and the money grows tax-free until retirement. A single $5,000 contribution at age 10 can grow to roughly $325,000 by age 65 at a 7% return:
| Child’s age | Amount contributed | Value at age 65 (7% avg. annual return) |
|---|---|---|
| Age 10 | $1,000 | ~$65,000 |
| Age 10 | $5,000 | ~$325,000 |
| Age 16 | $5,000 | ~$183,000 |
| Age 18 | $5,000 | ~$160,000 |
These projections use a 7% average annual return (the historical long-term average for diversified stock index funds) and are for illustration only — actual returns will vary. The core point: money invested young has the most time to compound, and all of that growth is tax-free.
Withdrawals: The child can withdraw their contributions at any time with no tax or penalty (since those dollars were already taxed). Earnings are generally locked until age 59½, though exceptions exist for qualified education expenses and a first home purchase (up to $10,000 lifetime).
What Are the Contribution Rules?
Two rules cap each year's contribution: you cannot put in more than the child's total earned income for the year, and you cannot exceed the annual IRA limit of $7,500 in 2026. Whichever number is lower is your ceiling — so a child who earns $3,000 can have at most $3,000 contributed:
- The child’s earned income: You cannot contribute more than the child actually earned that calendar year. If they earned $3,000, the maximum contribution is $3,000.
- The annual IRA contribution limit: Set by the IRS each year — $7,500 for 2026, up from $7,000 in 2025 (see irs.gov). This cap applies across all IRAs the child holds.
You — the parent — can make the actual contribution. The child does not have to deposit the money themselves. So if your 12-year-old earns $2,000 babysitting and you want to give them a head start, you can contribute $2,000 to their Roth IRA out of your own pocket (up to what they earned). The deadline to contribute for a given year is the tax filing deadline, typically April 15 of the following year.
No income limit for Roth IRA eligibility
Adult Roth IRAs phase out for high earners, but children rarely have income anywhere near those thresholds. As long as the child has earned income, they qualify — no income ceiling to worry about.
What Counts as Earned Income for a Child?
The IRS defines earned income as wages, salaries, tips, and net self-employment income — money the child actually worked for. Allowances, gifts, and investment income do not count. Common qualifying sources include W-2 jobs, babysitting, lawn care, tutoring, and freelance work; self-employment over $400 net is reported on Schedule SE:
- W-2 job: Part-time or summer employment — the most straightforward documentation
- Babysitting or childcare: Self-employment income reported on Schedule SE if net earnings exceed $400
- Lawn care, cleaning, or other services: Self-employment income, keep records of what was paid
- Freelance work: Design, photography, tutoring, social media management — documented 1099 or self-reported
- Modeling or acting: W-2 or 1099 from an agency or production company
- Family business wages: Legitimate pay for real work at a reasonable rate — must be documented and proportionate
The following do not count as earned income: allowance, gifts, interest and dividends, Social Security benefits, or child support. The income must be compensation for actual work performed.
Can ITIN Families Open a Custodial Roth IRA?
Yes. ITIN families can open a custodial Roth IRA, with the nuance that the child needs their own taxpayer ID — an SSN if they are U.S.-born, or an ITIN otherwise. The parent acting as custodian can use their own ITIN. The 3 major brokerages (Fidelity, Vanguard, Schwab) all accept an ITIN to open these accounts by phone:
US-born children automatically receive a Social Security Number at birth. They can open a custodial Roth IRA at any major brokerage using that SSN as soon as they have earned income. No additional steps needed.
Foreign-born children living in the US may need an ITIN to open the account. An ITIN requires that the child have a US tax filing requirement — typically triggered by earned income. If your child earns income and you file a US tax return, they can apply for an ITIN (Form W-7) at the same time you file. Once they have an ITIN, most major brokerages will accept it to open a custodial account.
Tax filing note: A child must file a federal tax return if their earned income exceeds the standard deduction (approximately $14,600 in 2025 — check irs.gov for the 2026 figure). If they earned less, a return is not technically required — but filing one establishes the earned income on record and makes it easy to justify your Roth contribution if the IRS ever asks.
Which Brokerages Accept ITIN for a Custodial Roth IRA?
The 3 largest low-cost brokerages — Fidelity, Vanguard, and Schwab — all offer custodial Roth IRAs with a $0 minimum and have processes for opening accounts with an ITIN. Fidelity is the most commonly recommended for ITIN holders because its phone-based account opening process is straightforward and its representatives are familiar with ITIN accounts.
| Brokerage | Custodial Roth IRA? | ITIN accepted? | Minimum investment |
|---|---|---|---|
| Fidelity | Yes | Yes (call to open) | $0 |
| Vanguard | Yes | Yes (call to open) | $0 (most funds) |
| Schwab | Yes | Yes (call to open) | $0 |
All three require a phone call or in-branch visit to open with an ITIN — the online flow assumes an SSN. Call the brokerage directly, explain that you have an ITIN and want to open a custodial Roth IRA for your child, and they will walk you through the paperwork. For more on opening brokerage accounts as an ITIN holder, see the full investing with an ITIN guide.
What Should My Child Invest in?
For a child with a 40–50+ year time horizon, a simple low-cost stock index fund is the standard recommendation. Broad market index funds like Fidelity ZERO Total Market Index Fund (FZROX) or Vanguard Total Stock Market Index Fund (VTSAX) give the child diversified exposure to thousands of companies in one holding, at minimal cost.
A target-date retirement fund — such as a "Target Date 2070 Fund" — is another option. These automatically shift from aggressive stocks toward more conservative bonds as the target year approaches, requiring zero ongoing management from you or the child.
Both approaches are appropriate for a long-horizon account. The most important decision is to invest early and invest consistently — even small amounts compound significantly over 50 years.
When Does My Child Take Full Control of the Account?
When the child reaches the age of majority in your state (18 in most states, 21 in others), the custodial arrangement ends and the account becomes theirs outright. The brokerage will typically send them a notice and require them to re-title the account in their name only.
At that point, the child can do anything they want with the account — continue investing, withdraw contributions (tax-free, penalty-free at any time), or change investments. The Roth IRA itself persists; only the custodial structure ends. You no longer have any legal authority over the funds.
This is worth discussing with your child before they reach 18. A Roth IRA is most valuable when left untouched until retirement — early withdrawals of earnings before age 59½ typically trigger income tax plus a 10% penalty.
Frequently Asked Questions
What is a custodial Roth IRA?
A Roth IRA opened and managed by a parent or guardian on behalf of a minor child. The child is the legal owner; the adult controls the account until the child reaches the age of majority (18–21, depending on state). Contributions are after-tax and grow completely tax-free.
Can my child have a Roth IRA if we use ITINs?
Yes. The child needs a taxpayer ID (SSN or ITIN) and earned income. Fidelity, Vanguard, and Schwab all accept ITINs for custodial Roth IRAs — call to open rather than using the online flow. Contributions cannot exceed the child’s earned income for the year, up to the annual IRA limit (see irs.gov for the current year limit).
What counts as earned income for a child?
Wages from a W-2 job, self-employment income from babysitting or freelance work, or legitimate wages paid by a family business for actual work performed. Allowance, gifts, interest, and dividends do not count as earned income for IRA purposes.
Why open a Roth IRA for a child instead of a 529 plan?
A 529 plan is restricted to education expenses; a Roth IRA can be used for anything in retirement. If your child does not attend college, a 529’s earnings face tax and a 10% penalty on non-qualified withdrawals. A Roth IRA’s contributions can be withdrawn at any time penalty-free, and earnings are tax-free in retirement. Note: since 2024, you can also roll up to $35,000 of unused 529 funds into a Roth IRA for the beneficiary.
Can a parent contribute to a child’s Roth IRA out of the parent’s own money?
Yes — as long as the contribution does not exceed the child’s earned income for the year. The money does not need to physically come from the child’s paycheck. If your child earned $3,000 babysitting, you can deposit $3,000 into their Roth IRA from your own account; the child’s earned income is what justifies the contribution.
What happens to the custodial Roth IRA when my child turns 18?
The account becomes the child’s outright. The brokerage will re-title it in the child’s name and remove the custodial arrangement. The Roth IRA itself continues — only the custodial structure ends. The child then controls all investment and withdrawal decisions.