A Roth IRA for child with no income has long been a point of confusion for parents who want to give their kids a financial head start. As of 2025, children without earned income still cannot directly contribute to a Roth IRA under existing IRS rules. However, new proposals and legislation are reshaping the retirement savings landscape for minors, and families should be aware of the opportunities and limitations ahead.
Table of Contents
Why a Roth IRA for Child with No Income Isn’t Currently Allowed
The IRS requires earned income to make Roth IRA contributions. That means babysitting, mowing lawns, or a part-time job qualifies, but allowance, gifts, or investment earnings do not. If a child has no income, they cannot legally contribute to a Roth IRA—even if parents want to help fund it.
This prevents parents from using Roth IRAs purely as wealth transfer tools and ensures the accounts remain tied to actual work performed.
The Big Change: Introduction of the Trump Account
In 2025, new legislation created a framework for what’s being called the Trump Account. Unlike Roth IRAs, this account would allow children with no earned income to begin saving. It marks the first serious attempt to break the earned income barrier that has long prevented families from using Roth-style strategies for minors without jobs.
Key features of the proposed account include:
- No earned income requirement for contributions.
- Annual cap on contributions, regardless of income level.
- Automatic $1,000 deposit for babies born between 2025–2028.
- Restricted investments limited to low-cost U.S. index funds.
- Conversion to IRA rules once the child turns 18.
While not yet active for contributions, the framework is expected to roll out in mid-2026.
How the Trump Account Differs from a Traditional Roth IRA for Kids
| Feature | Roth IRA for Kids | Trump Account |
|---|---|---|
| Eligibility | Earned income required | No income needed |
| Contribution Limit | Up to $7,000 or earned income | Flat annual cap (around $5,000) |
| Starter Bonus | None | $1,000 deposit for newborns 2025–2028 |
| Investment Choices | Wide range of funds | Restricted to U.S. index funds |
| Withdrawals Before 18 | Allowed (contributions only) | Not allowed |
| After Age 18 | Standard Roth rules | Converts to Traditional IRA, option to convert to Roth |
This side-by-side comparison highlights why families with children who don’t earn income are so closely watching this development.
What Families Should Do Now
While the Trump Account will not launch until at least July 2026, parents can prepare by taking the following steps:
- If your child has earned income: Open a custodial Roth IRA today. Document all work performed and ensure contributions don’t exceed their earnings.
- If your child has no income: Wait for the Trump Account rollout. In the meantime, consider alternatives like UTMA/UGMA custodial accounts, 529 plans, or regular brokerage accounts.
- Plan ahead: Once the Trump Account is live, weigh the tax implications of future Roth conversions.
Risks and Considerations
- Implementation delays: The proposed 2026 start date could shift.
- Political changes: Future administrations may amend or repeal the account structure.
- Conversion taxes: Converting Trump Accounts to Roth IRAs will trigger taxes on investment gains.
- Investment restrictions: Families may prefer broader investment options than the account allows.
Final Word
The idea of a Roth IRA for child with no income is finally closer to becoming reality, thanks to new legislative efforts. Although it’s not yet possible under current rules, families should watch closely as the Trump Account prepares for its 2026 debut. This could open the door to long-term retirement savings strategies for children without jobs, giving them a powerful head start on financial independence.
What are your thoughts on the new proposal? Share your opinions and let us know how you plan to prepare.
FAQs
Q: Can a Roth IRA be opened for a child with no income today?
A: No, current IRS rules require earned income to justify any Roth IRA contribution.
Q: When will the Trump Account begin accepting contributions?
A: The program is scheduled to launch no earlier than July 4, 2026.
Q: Can the Trump Account be converted to a Roth IRA later?
A: Yes, after age 18, it can be converted to a Roth IRA, but taxes apply to earnings at conversion.
Disclaimer: This article is for informational purposes only and should not be taken as financial, legal, or tax advice. Always consult a qualified professional before making investment or retirement decisions.