Can you open a Roth IRA for your adult child? (No — but you can fund one)

Why you can't open it — and why that doesn't matter

An IRA is an individual account. The person whose name is on it must be the one who signs the account agreement, provides the Social Security number and makes the investment decisions. A parent can do that on a child's behalf only while the child is a minor, through a custodial account; once the child reaches the age of majority under state law — 18 in most states, 21 in a few — custodians will not open a new custodial IRA, and any existing one is re-registered into the child's sole name.

So the literal answer to "can I open a Roth IRA for my adult child" is no. The useful answer is that nothing in the tax code cares where the contribution dollars came from. The IRS rules in Publication 590-A limit how much a person may contribute based on their compensation; they do not require that the money be earned by them, saved by them, or even pass through their paycheck. Your child opens the account at any brokerage in about ten minutes, you give them the money, and they contribute it. That is the whole mechanism.

Your child can already have a Roth IRA from a summer job or employer; this can be the same account or a new one, and the annual limit is shared across all of them — see can you have multiple Roth IRAs for how that aggregation works.

The earned-income rule decides the amount

For 2026 the IRA contribution limit is $7,500 for anyone under 50 (IRS — 2026 limits, Notice 2025-67). But the real ceiling is the lesser of that figure or the account owner's taxable compensation for the year. That is the rule that trips parents up, because the gift itself is not compensation.

Source: IRS Publication 590-A, "What is compensation?"; the graduate-stipend rule was added by the SECURE Act of 2019.

Three practical consequences. A child who earned $4,200 in a part-time job can receive and contribute $4,200, not $7,500 — even if you are paying for all of it. A child still in school with no job has a limit of zero. And the income does not have to be large enough to require a tax return: a first-year analyst, a waiter, a lifeguard and a graduate teaching assistant all qualify on the same footing.

Contributions for 2026 can be made until the tax filing deadline in April 2027, which is useful: by then your child knows exactly what they earned.

How the gift works for gift-tax purposes

Legally, this is two transactions: a gift of cash from you to your child, then a contribution by your child to their own IRA. The gift is what you need to think about.

For 2026 the annual gift-tax exclusion is $19,000 per recipient — unchanged from 2025 — under Rev. Proc. 2025-32. Gifts to one person up to that amount in a calendar year are simply ignored for gift-tax purposes: no tax, no reporting, no use of your lifetime exemption. A $7,500 Roth gift fits with room to spare.

• It is per giver. Each parent has their own $19,000 exclusion for the same child, so a married couple can give up to $38,000 a year to each child without a return.
• Count every gift to that child. The Roth money shares the $19,000 with birthday checks, help with rent or a car. Tuition paid directly to the school and medical bills paid directly to the provider are excluded separately under §2503(e) and do not use it up.
• Form 709 only above the exclusion. A gift-tax return (Form 709) is required only if one parent's gifts to one person exceed $19,000 for the year — and even then, tax is owed only once lifetime taxable gifts pass the basic exclusion amount, which the IRS lists as $15,000,000 for 2026. One nuance: if one spouse writes a check above $19,000 and you want to treat it as coming half from each, that gift-splitting election is itself made on Form 709. Giving from a joint account, or each spouse writing their own check, avoids the paperwork.

Gift tax, if any, is the giver's liability. Your child does not report the gift as income and pays no tax on receiving it.

The "match what they earn" method

The approach that works best in practice — and the one we see families stick with — is a simple match: you contribute a dollar to their Roth for every dollar they earn, up to the annual limit. They keep their paycheck to live on, which is realistic for someone paying first rent and student loans, and the Roth fills from your side.

It has three things going for it. The earned-income rule is satisfied automatically, because you never contribute more than they earned. It frames the gift as a reward for working rather than an allowance. And it scales on its own: a student earning $3,000 over the summer gets $3,000; a first-year employee on $55,000 gets the full $7,500.

Some parents add a condition that the child also puts something in — a 401(k) deferral large enough to capture the employer match, say. That is a family agreement, not a legal one. It is enforceable only by goodwill, which is worth being honest about up front.

What nine years of gifts can become

The reason this is so often called the highest-leverage gift a parent can make is time. Money put in at 22 has roughly four decades to compound, and a qualified distribution in retirement — after age 59½ and five years — is entirely tax-free. The table compares a child whose parent funds $7,500 a year from 22 to 30 and then stops, with one who starts contributing $7,500 a year at 35 and never misses a year until 65.

Illustrative, not a promise. The 6% return is a deliberately modest nominal assumption, held constant for clarity; real returns vary year to year, can be negative, and are not guaranteed. Contribution limits are held at the 2026 figure for simplicity, although they are indexed for inflation. Figures are not adjusted for inflation.

Nine years of gifts totalling $67,500 end up slightly ahead of thirty years and $225,000 of the child's own later saving. That asymmetry is the whole argument. It is also why the gift is best made early in a working life, when the child's income is low and their incentive to lock money away for retirement is weakest.

Traps to check before you write the check

The income limits apply to your child, not you. A parent's own income is irrelevant here, which is part of the appeal for high earners who cannot contribute directly themselves. But the child must pass the Roth test on their own MAGI: for 2026 the contribution phases out between $153,000 and $168,000 for single filers and $242,000 and $252,000 for married couples filing jointly (IRS Notice 2025-67). That rarely binds at 23; it can bind for a married 30-year-old in medicine, law or tech.

Over-contributing costs 6% a year. If the gift is contributed and the child's compensation turns out to be lower — a job that ended in March, say — the excess is subject to a 6% excise tax every year it stays in the account (§4973). The fix is to withdraw the excess plus its earnings before the filing deadline, including extensions. Waiting for the W-2 before funding avoids the problem entirely.

The five-year clock starts with the first contribution. For earnings to come out tax-free, the account owner must be 59½ (or disabled, or using up to $10,000 for a first home) and five tax years must have passed since January 1 of the year for which their first Roth contribution was made. An early gift starts that clock early, which matters most for the first-home exception. How that clock works — and why a single early contribution starts it for life — is in the Roth IRA 5-year rule; the separate conversion clock is a different rule.

Contributions can come straight back out. Under the ordering rules, contributions are withdrawn first and are always tax- and penalty-free — see Roth IRA basis for how the child should track them. That is a genuine feature: the account doubles as a deep emergency fund. It is also the risk. A child can empty their contribution basis for a car tomorrow, and pulling earnings early brings tax and the 10% penalty, laid out in the Roth IRA early withdrawal guide.

There are no strings. Once the gift is made it belongs to your child — legally, completely, including in a divorce or a creditor claim to the extent state law allows. If control matters to you, a 529 plan is the contrast: the owner (you) keeps control and can change the beneficiary. Leftover 529 money can even move to the beneficiary's Roth, within a $35,000 lifetime cap and other conditions, covered in the 529-to-Roth IRA rollover guide.

If your child is still a minor: the custodial Roth

Everything above changes in one respect for a child under the age of majority: you can open the account. A custodial Roth IRA is owned by the child and managed by a parent or other adult as custodian, who makes the investment decisions until the child reaches the age set by state law and the custodian specifies — usually 18 or 21. Then control passes to the child, without conditions.

The earned-income rule is identical, and it is the harder part with young children. Babysitting, lawn mowing and pet-sitting count if they are real and paid at a market rate; keep a simple ledger of who paid, when and how much. Wages from a family business count if the work is genuine and the pay is reasonable for it. What does not count is an allowance or chores at home. Most large brokerages offer custodial Roth accounts with no minimum. For the full set of rules — how family-business wages are documented, when they escape FICA, and what happens at the age-of-majority handover — see our guide to opening a custodial Roth IRA for a child.

The estate-planning angle

For families with a taxable estate, or one that might become taxable, this is a small but efficient lever. Every annual-exclusion gift leaves your estate immediately and permanently, without touching your lifetime exemption. Money inside the child's Roth then compounds outside your estate and, on qualified withdrawal, outside the income-tax system as well — so the growth never shows up on your estate tax return or the child's income tax return.

Put in numbers: $7,500 a year for nine years moves $67,500 out of your estate; at the table's assumed return, the growth attributable to it is worth several hundred thousand dollars by the child's retirement, none of which you ever owned. Across several children and grandchildren — each with their own earned income — the effect multiplies. It is not a substitute for broader planning, and the advanced strategies hub covers the heavier tools, but it is one of the few gifts that is simultaneously estate-efficient, income-tax-free and genuinely useful to someone in their twenties.

How to do it, step by step

1. Confirm your child's earned income for the year — the W-2, the 1099s, or pay records — and that their MAGI is below the phase-out.
2. Have your child open a Roth IRA in their own name, or use the one they already have.
3. Give the cash to your child, ideally by transfer to their bank account, for no more than the lesser of $7,500 or their compensation.
4. Your child contributes it and designates the tax year — before the April filing deadline for the prior year, if you are using the lookback.
5. Keep a note of the gift amount and make sure your total gifts to that child stay within $19,000, or plan to file Form 709.