Open a Custodial Roth IRA for Your Working Teen: From First Paycheck to Funded, Documented Account
A funded custodial Roth IRA invested in the teen's name at a named brokerage, backed by verified earned income and complete tax records, with a dated plan for handing the account to the teen at the age of majority.
Free preview: 4 of 22 steps
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Who it's for
Parents or guardians of US teenagers with taxable earned income — lifeguards, servers, interns, babysitters, lawn crews — who want that money compounding toward retirement instead of evaporating, and who are willing to serve as the account's custodian until the age of majority.
About this playbook
A working teenager's earned income is the only key that opens a Roth IRA, and opened young, the account has half a century to compound untaxed. This guide walks a parent through the full procedure: confirming which of the teen's earnings qualify, calculating the exact contribution ceiling, choosing a broker that offers custodial Roth accounts in their state, opening and funding the account with the correct tax-year label, and investing the money for a fifty-year horizon. It also builds in the unglamorous parts that protect the account later — Form 5498 records, excess-contribution corrections, the FAFSA treatment of retirement assets, and the ownership transfer when the teen reaches majority. It does not cover picking individual stocks, state-specific tax advice, or whether a Roth beats a 529 for college savings.
What you'll do, step by stepFree preview
Only a sample is open: 4 of 22 steps can be read in full. The rest unlock when you buy.
Phase 1: Verify the earned income that unlocks the account
4 stepsPhase 2: Choose the custodian and prepare the paperwork
4 stepsPhase 3: Open, fund and invest the account
5 stepsPhase 4: Keep the contribution record clean
4 stepsPhase 5: Plan the handoff and the decades-after rules
5 steps
Details
What you need first
The teen has a Social Security number and taxable compensation for the tax year being funded; an adult is willing and eligible to act as custodian; a US brokerage offering custodial Roth IRAs serves the teen's state of residence; and a bank account exists to fund the deposit.
