Can a minor child contribute to a Roth IRA?

Yes. Under IRC §408A, there is no minimum age for a Roth IRA contribution. Any person with earned income can contribute to a Roth IRA — including children. The contribution limit is the lesser of the annual IRA limit ($7,000 in 2026) or the child's total earned income for the year. A child with $7,000 in STR wages can contribute $7,000 to a Roth IRA.

Does my child have to contribute their own wages to the Roth IRA?

No. The child's wages must be genuine and documented, but the actual money contributed to the Roth IRA does not need to come from their paycheck. You as the parent can deposit the contribution on the child's behalf — as long as the contribution amount does not exceed the child's earned wages for the year. So a child who earns $7,000 in STR wages but spends their paycheck can still have a $7,000 Roth IRA contribution funded by the parent.

What type of Roth IRA account do I open for my child?

Open a custodial Roth IRA — a Roth IRA for a minor that is managed by a custodian (the parent) on the child's behalf. When the child reaches the age of majority in your state (typically 18 or 21), the account converts to a standard Roth IRA in their name. Fidelity, Schwab, and Vanguard all offer custodial Roth IRAs with no minimums and low fees.

April 6, 2026 · 7 min read

Can I Fund My Child's Roth IRA From STR Wages?

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Yes — under IRC §408A, a child with earned income from your STR business can contribute to a Roth IRA, up to the lesser of their wages or the annual IRA limit ($7,000 in 2026). You as the parent can make the actual contribution on their behalf. The wages must be genuine and documented, but the contribution money can come from you — creating decades of tax-free compounding from legitimate childhood work.

The Roth IRA Basics for Children

A Roth IRA is funded with after-tax dollars and grows completely tax-free. Withdrawals in retirement are also tax-free. For a child:

No income limit to contribute (unlike traditional IRA phase-outs)
No minimum age requirement
Contributions limited to the lesser of: earned wages or $7,000 (2026 annual limit)
Contributions (not earnings) can be withdrawn at any time without penalty
After age 59½, all withdrawals including earnings are tax-free

Under IRC §219, earned income is the qualifying income for IRA contributions. Wages from your STR business — for cleaning, laundry, guest services, photography, or any other legitimate work — create the earned income threshold that unlocks Roth IRA eligibility.

The Parent Contribution Rule

One of the most powerful and underutilized features of custodial Roth IRAs: the child does not have to contribute their own paycheck. The rule is simply that the contribution cannot exceed the child's earned income for the year. Where the money physically comes from is irrelevant.

Example: Your 14-year-old earns $7,000 in wages helping with STR turnovers. They deposit their paycheck and spend most of it. You contribute $7,000 to their custodial Roth IRA from your own account. This is fully compliant — the wages establish the earned income, and you fund the account on their behalf.

Compounding Over Time

$7,000 contributed to a Roth IRA at age 12, growing at 7% average annual return for 53 years (to age 65):
Future value: ~$170,000 — all tax-free

Do this for 6 years (ages 12–17): $7,000 × 6 = $42,000 in contributions. Future value at 65: approximately $670,000 in tax-free retirement income from legitimate work in your STR business.

How to Set Up a Custodial Roth IRA

Open a custodial Roth IRA — a standard Roth IRA structured for minors, with a parent as custodian. Steps:

Choose a brokerage (Fidelity, Schwab, and Vanguard all offer custodial Roths with no minimums)
Complete the custodial Roth IRA application online
Provide both your information (as custodian) and your child's information (as beneficiary)
Fund the account up to the lesser of $7,000 or the child's earned wages
Invest in low-cost index funds for long-term growth

When your child reaches the age of majority in your state (typically 18), the account automatically converts to a standard Roth IRA in their name.

Documentation Requirements

The key documentation requirement: the child's wages must be genuine and documented before the Roth IRA contribution is made. This is not a chicken-and-egg situation — the work comes first, then the IRA contribution.

Written job description and employment terms
Time logs showing hours worked and tasks performed
W-2 issued by January 31 confirming wages for the year
Payment by check or bank transfer (not cash)

The IRS can — and occasionally does — audit IRA contributions where the underlying earned income is questionable. Child employment in family businesses is a known scrutiny area. Your documentation must show that the wages were earned, not invented to create IRA eligibility.

Income Tax on Child Wages: Minimal to Zero

Assuming wages are at or below the standard deduction ($14,600 in 2026), your child owes zero federal income tax on the wages. They pay FICA unless the FICA exemption applies (sole proprietor employer, child under 18). The Roth IRA contribution itself uses after-tax money — but "after-tax" money that was never taxed because the standard deduction covered it.

This creates the optimal outcome: your business gets a deduction, your child pays zero tax, and the contributed funds grow tax-free forever. See our guide on how much you can pay your child before they owe taxes for the full income tax picture.

Contribution Deadline

Roth IRA contributions for a tax year can be made through the tax filing deadline (April 15 of the following year). So wages earned in 2026 can be contributed to a Roth IRA until April 15, 2027. If your child worked throughout 2026, you have until April 2027 to make the contribution. Don't rush — just make sure you have the W-2 and wage documentation before funding the account.

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Disclaimer

This article is for informational purposes and does not constitute tax, legal, or financial advice. Tax rules vary based on your specific situation, filing status, entity structure, and jurisdiction. Always consult a qualified CPA or tax professional for guidance on your specific tax situation. IRS rules and thresholds are subject to change — verify current requirements at irs.gov before filing.