: You contribute after-tax dollars . This is a massive win for teens who are typically in a 0% or very low tax bracket.
Think of your Roth IRA as a gallery where each contribution is a piece of art that grows in value over time.
Since minors cannot legally open investment accounts themselves, a parent or guardian must set up a custodial account .
: You can eventually use up to $10,000 of your earnings penalty-free for a first home purchase. Summary Table: Teen Roth IRA at a Glance 2025 Rules 2026 Rules Max Contribution Requirement Earned Income Earned Income Tax Status After-tax (Roth) After-tax (Roth) Management Custodial (Adult Managed) Custodial (Adult Managed)
April is National Financial Literacy Month , the perfect time to explore one of the most powerful wealth-building tools available to young savers: the . While retirement might seem lightyears away, starting a "financial gallery" of investments today can turn modest summer job earnings into a million-dollar legacy by the time you reach adulthood. 1. What is a Custodial Roth IRA?
A common myth is that Roth IRA money is "locked away" until age 59½.
: Parents can contribute on a teen's behalf . If a teen earns $1,000 at a job and spends it, a parent can still put $1,000 of their own money into the teen’s Roth IRA. 3. The "Gallery" Effect: Compound Interest in Action