A Roth IRA for child with no income is one of the most asked-about topics among parents who want to give their kids a head start in life. With tax laws changing in 2025 and the introduction of new savings account frameworks, families are wondering: Can a child without income really have a retirement account?
The short answer right now: No, a Roth IRA requires earned income. But new legislation, including the rollout of the Trump Account, is creating opportunities that could reshape how parents and guardians save for their children’s financial future.
This guide breaks down everything you need to know—current IRS rules, the limits of Roth IRAs, how the Trump Account changes things, and practical steps families can take while waiting for the new law to take effect.
What Is a Roth IRA for Kids?
A Roth IRA for kids works the same way as an adult Roth IRA, but with a custodian (usually a parent or guardian) managing the account until the child turns 18. Contributions are made with after-tax dollars, and withdrawals in retirement are tax-free.
For kids, this is powerful because of time and compounding. Imagine investing at age 12 and not withdrawing until 65—that’s over 50 years of tax-free growth. A small $500 investment could grow into thousands by the time your child retires.
But there’s a catch: earned income is required.
Why a Roth IRA for Child with No Income Isn’t Allowed
The IRS doesn’t allow contributions into a Roth IRA without earned income. Why? Because Roth IRAs are designed as retirement savings accounts tied to work, not as vehicles for transferring wealth to minors.
- What counts as earned income: Babysitting, lawn mowing, tutoring, acting jobs, modeling gigs, or a part-time job.
- What doesn’t count: Allowances, birthday gifts, investment interest, dividends, or money from parents.
Example:
- If your child earns $2,000 babysitting in a year, you can contribute up to $2,000 to their Roth IRA.
- If your child earns $0, you cannot legally contribute to a Roth IRA in their name.
The 2025 Legislative Shift: The Trump Account
Here’s where things get interesting. In 2025, lawmakers introduced a new savings account called the Trump Account. This account is specifically designed for children with no income, and while it is not a Roth IRA, it acts as a bridge toward something very similar.
Key Features of the Trump Account
- No earned income required to contribute.
- Annual contribution cap of $5,000, regardless of income.
- One-time $1,000 baby bonus for children born between 2025 and 2028.
- Restricted investments—only U.S. equity index funds or ETFs with low fees.
- No withdrawals allowed until 18.
- At 18, the account converts into a Traditional IRA (with the option to roll over into a Roth IRA, but taxes will apply to earnings).
When Will It Start?
The Trump Account is scheduled to launch no earlier than July 4, 2026. That gives custodians, brokerages, and regulators time to build systems and compliance structures.
Roth IRA vs. Trump Account for Kids
Let’s compare these two side by side:
| Feature | Roth IRA for Kids | Trump Account (New) |
|---|---|---|
| Eligibility | Earned income required | No income required |
| Contribution Limit | Lesser of earned income or $7,000 (2025 limit) | Flat $5,000 per year |
| Starter Bonus | None | $1,000 for babies born 2025–2028 |
| Investment Options | Wide—stocks, bonds, ETFs, mutual funds | Limited to U.S. equity index funds |
| Withdrawals Before 18 | Contributions can be withdrawn anytime | No withdrawals allowed |
| At Age 18 | Remains a Roth IRA | Converts to Traditional IRA (with Roth option) |
| Tax Treatment | After-tax contributions, tax-free withdrawals | Non-deductible contributions, taxable earnings unless converted |
This comparison makes it clear: Roth IRAs are better if your child has income, but the Trump Account creates a new path for children without income.
Why This Matters for Families
Parents have long searched for legal ways to give their kids a jumpstart on retirement. The Trump Account creates a first-of-its-kind opportunity.
Imagine this:
- You open a Trump Account for your newborn in 2026.
- You add $5,000 each year until they turn 18.
- At 8% average annual return, that account could exceed $200,000 by the time your child reaches adulthood.
- With a Roth conversion later, much of that growth could eventually be tax-free.
This is why families are so interested. The rules may be restrictive, but the time value of money makes it a groundbreaking option.
Current Options for a Child With No Income (Until 2026)
Since Roth IRAs aren’t available without income and the Trump Account hasn’t launched yet, what can parents do now?
1. 529 College Savings Plans
- Tax-advantaged for education expenses.
- Unused funds can be rolled into a Roth IRA (up to $35,000) under new rules—but only if the child later earns income.
2. UTMA/UGMA Custodial Accounts
- No income requirement.
- Flexible withdrawals for anything that benefits the child.
- Downside: Not tax-free, and ownership transfers to the child at 18 or 21.
3. Custodial Brokerage Accounts
- Open-ended investment opportunities.
- No tax advantages like a Roth, but allows early investing.
4. Savings Bonds or Trusts
- Low growth but safe options.
- Can be structured for education or long-term goals.
These accounts won’t provide the same tax-free retirement growth as a Roth IRA, but they keep the savings momentum going until new legislation takes effect.
How Families Can Prepare for the Trump Account
- Budget for Contributions Now
Start setting aside $5,000 annually (if possible) in a separate savings account so you’re ready to fund the Trump Account once it launches. - Track Birth Eligibility
If your child is born between 2025–2028, they’ll qualify for the one-time $1,000 deposit. - Plan for Investment Growth
Learn about low-cost U.S. index funds, since the Trump Account will limit options. - Consider Long-Term Roth Conversions
Think ahead: at 18, you may want to convert the Trump Account to a Roth IRA, even if it triggers taxes on earnings. This strategy could maximize future tax-free withdrawals.
Risks and Limitations
No savings vehicle is perfect. Families should be aware of potential risks with both Roth IRAs and Trump Accounts:
- IRS scrutiny if a Roth IRA is funded without legitimate earned income.
- Political risk: A future administration could repeal or revise the Trump Account.
- Conversion taxes when moving Trump Accounts into Roth IRAs at age 18.
- Investment restrictions limiting growth opportunities compared to broader Roth IRAs.
- Liquidity issues: Trump Accounts lock up funds until the child turns 18.
Real-Life Example Scenarios
Scenario 1: Child with No Income in 2025
- Cannot open Roth IRA.
- Parents open UTMA account.
- In 2026, they roll savings into Trump Account for long-term growth.
Scenario 2: Teenager with a Summer Job
- Earns $3,000 mowing lawns.
- Parents open custodial Roth IRA and contribute $3,000.
- Over 50 years, that small amount could grow into six figures tax-free.
Scenario 3: Newborn in 2026
- Automatically receives $1,000 in Trump Account.
- Parents contribute $5,000 annually until age 18.
- By adulthood, the child has a massive head start.
Practical Checklist for Parents in 2025–2026
- ✅ Document earned income if your child works.
- ✅ Open a custodial Roth IRA if eligible.
- ✅ Save separately for future Trump Account contributions.
- ✅ Explore 529 and UTMA accounts for flexibility.
- ✅ Stay updated on final Trump Account rollout rules.
The Bigger Picture
The introduction of a Roth IRA for child with no income through alternative structures like the Trump Account is a potential game-changer. For decades, families have been restricted by the earned income rule. Now, the door is opening to tax-advantaged retirement savings for all children—whether they mow lawns, babysit, or simply haven’t yet entered the workforce.
This shift could mark the beginning of a generational wealth strategy where saving starts at birth, not at a first job.
Final Word
A Roth IRA for child with no income isn’t allowed under today’s IRS rules, but the future looks very different. With the Trump Account set to roll out in 2026, parents should prepare now for a savings tool that could redefine financial planning for children.
Would you use a Trump Account for your child’s future? Share your thoughts in the comments—we’d love to hear your perspective.
FAQs
Q: Can I open a Roth IRA for my child if they don’t work?
A: No, IRS rules require earned income to contribute. Gifts or allowances don’t qualify.
Q: What is the Trump Account and when does it start?
A: It’s a new retirement-style account for kids with no income, launching no earlier than July 2026.
Q: Can Trump Accounts later become Roth IRAs?
A: Yes, at age 18 they can be converted, but taxes will apply to investment earnings.
Disclaimer: This article is for educational purposes only. It is not financial, legal, or tax advice. Always consult a certified professional before making investment decisions.