Roth IRA for kids with Fidelity options

Parents & guardians · Parent guide · Updated October 1, 2026 · LearnLife Editorial

Why Should Kids Learn About Roth IRAs and Retirement Saving Early?

Teaching kids about Roth IRAs introduces them to important financial concepts early: saving, investing, and compound growth. When children understand these ideas, usually around ages 10 to 15, they begin to see how money saved now can grow significantly by the time they retire. Explaining that money invested today can multiply many times over decades helps children value patience and delayed gratification. This knowledge also encourages them to develop healthy money habits, such as budgeting and consistent saving.

Parents can use everyday examples to illustrate compound growth. For instance, say, “If you put $100 into a Roth IRA at age 10, and it grows steadily every year, it can become much more by the time you’re an adult, even without adding more money.” This shows how early saving creates a strong financial foundation. Introducing Roth IRAs also helps kids connect work and rewards because contributions must come from earned income.

Teaching kids about Roth IRAs early gives them control and involvement in their financial future. They can watch the account grow, learn investment basics, and build confidence handling money. This skill is a key step in becoming financially independent adults.

At What Age Can Kids Open a Roth IRA with Fidelity?

A Roth IRA can be opened for a child once they have earned income, which means money from jobs like babysitting, dog walking, or paper routes. Many children start earning this type of income around ages 10 to 12, but it varies. Fidelity and most brokers require a parent or guardian to open a custodial Roth IRA account until the child reaches adulthood, usually 18 or 21 depending on the state.

Here is a detailed age-by-age approach for parents to use when teaching and opening a Roth IRA:

Parents can prepare their child for the Roth IRA by first tracking any earned income together. For example, if your child earns $300 mowing lawns over a summer, explain that they can contribute some or all of that money into their Roth IRA with your help.

How to Explain the Roth IRA to Kids and Teens?

Clear, simple language is key when explaining Roth IRAs to children. Avoid financial jargon and use analogies that relate to their daily lives. For example, compare a Roth IRA to a “super piggy bank” where money grows faster because of interest and investing, and you don’t pay taxes on the money when you take it out after a long time.

Here’s an example you can say to your child:

“You know how you get money for helping with chores or babysitting? A Roth IRA is a special savings account where you can put some of that money. It grows over time, and when you’re much older, you can use it without owing taxes. It’s like planting a tree now so you have shade when you grow up.”

To make it interactive, ask questions like: “If you saved just $10 each week, what do you think would happen over a year?” This helps kids imagine the benefits of consistent saving. Show them how money compounds by using simple calculators or apps designed for kids.

Explain the rule that contributions can only come from money they’ve earned, linking effort to reward. Reinforce that the Roth IRA is for long-term saving, not for spending soon, but that they can always take out their original contributions if needed.

How Does a Custodial Roth IRA Work at Fidelity for Kids?

A custodial Roth IRA means the account is opened and managed by a parent or guardian until the child becomes an adult, but the money belongs to the child. Fidelity allows parents to open these accounts with as little as $0 initial deposit and offers many investment options, including index funds, mutual funds, and ETFs.

Here’s how the process typically works:

1. Parent or guardian opens the account online or in person as the custodian.
2. The child’s earned income must be documented; for example, a signed statement or pay stub.
3. Contributions are limited to the child’s total earned income for the year.
4. Parents and child decide together on investment choices based on risk tolerance and goals.
5. The custodian manages the account, making contributions and decisions until the child reaches legal age.
6. When the child becomes an adult, the account is transferred to their control.

Fidelity offers educational resources and tools designed for young investors to help families make informed decisions. Using low-cost index funds often suits young investors because they provide broad market exposure with lower risk.

Parents should explain fees and minimum balances clearly. Fidelity typically has no account minimums for Roth IRAs and offers commission-free ETFs and mutual funds, making it accessible for kids starting with small amounts.

Everyday Moments to Practice Roth IRA Skills with Your Child

Incorporate Roth IRA lessons into everyday financial moments to reinforce learning naturally.

• When your child earns money from a job or allowance, ask, “Do you want to put some of this into your Roth IRA to help it grow?”
• Use grocery shopping as a chance to talk about budgeting and saving. For example, “If you save $5 a week, that’s enough to put some money into your Roth IRA by the end of the month.”
• Review monthly account statements together. Show how investments have grown or changed, and discuss why that might be.
• Play games or use apps that simulate investing, so your child understands how markets work.
• Celebrate saving milestones. For example, “You’ve saved $200 in your Roth IRA! That’s a great start to your future.”

By turning abstract ideas into real actions, children learn to value saving and investing without feeling overwhelmed. This also builds trust and openness about money in your family.

Common Mistakes Parents Make When Starting a Roth IRA for Kids

Several pitfalls can slow down or confuse the process of opening a Roth IRA for a child:

• Opening an account before the child has earned income: The IRS requires contributions to come from earned income, so setting up a Roth IRA before this can lead to complications.
• Not explaining how the account works: Kids may lose interest if they don’t understand the benefits or rules of the Roth IRA. Keep explanations simple and linked to their experiences.
• Ignoring contribution limits: Parents sometimes contribute more than the child’s earned income, which is not allowed.
• Overlooking investment education: Without guidance, kids may not learn how to choose investments or understand market ups and downs.
• Failing to make regular contributions: Small, consistent deposits build habits better than occasional large ones.
• Neglecting to discuss withdrawal rules: Kids should know when they can and cannot take money out without penalties.
• Not reviewing account fees: Some accounts have fees or minimums that can reduce returns. Fidelity is generally low-cost, but always check.

Avoid these mistakes by planning carefully, educating your child step-by-step, and reviewing account details frequently.

When Should Parents Get Extra Help Setting Up or Teaching Roth IRAs?

If you’re unsure about the tax rules, contribution limits, or how to document your child’s earned income, consult a tax professional or financial advisor. They can clarify state-specific custodial rules or help with complex situations like self-employment income for kids.

For teaching, numerous nonprofit organizations and online platforms offer financial literacy courses designed for families. Fidelity’s customer service can assist with account-specific questions, and many brokers provide educational webinars or materials suited for young investors.

If your child struggles to understand investing or money management, consider using games, apps, or enrolling in youth financial education programs. If emotional or behavioral challenges arise around money, a counselor or trusted adult can provide support.

Getting help early avoids costly mistakes and builds a strong foundation for your child’s financial success.

Frequently asked questions

Can a child open a Roth IRA without earned income?

No. The IRS requires that contributions to a Roth IRA come from earned income, such as wages from jobs or self-employment. Without earned income, a child cannot legally contribute to a Roth IRA, even if the account is opened.

How much can my child contribute to a Roth IRA?

Your child can contribute up to the amount they earned in the year or the IRS annual contribution limit, whichever is less. For example, if your child earned $800 from babysitting, they can contribute up to $800 to their Roth IRA that year.

Can my child withdraw money from their Roth IRA before retirement?

Contributions (the money put in) can be withdrawn anytime without taxes or penalties. However, earnings (investment growth) withdrawn before age 59½ may be subject to taxes and penalties unless exceptions apply. Parents should explain this to prevent premature withdrawals.

What investment options does Fidelity offer for a child’s Roth IRA?

Fidelity offers index funds, mutual funds, ETFs, and individual stocks. For beginners, low-cost diversified index funds are often recommended because they reduce risk and help grow money steadily over time.

When does the child gain control of their Roth IRA account?

When the child reaches the age of majority in their state—usually 18 or 21—the custodial Roth IRA can be transferred to their name, giving them full control over investments and contributions.

Can a child earn income from informal jobs like babysitting for Roth IRA contribution?

Yes. The IRS accepts earned income from informal jobs like babysitting, lawn care, or tutoring, as long as it is reported and taxable. Parents should keep records, such as a signed statement or simple ledger, to prove the income.