Can Someone Else Contribute to My Roth IRA?

You’ve started investing. Congratulations! Investing for the future using a Roth IRA is a savvy choice that can save thousands in tax fees down the road. But here’s the question: Are you the only one who can contribute to your Roth IRA? Or can other people contribute for you?

The short answer is yes. Other people can contribute to your Roth IRA on your behalf. There are two specific types of Roth IRAs that are set up precisely for this: a custodial Roth IRA, and a spousal IRA. While both types still require earned income in order to open the account, contributions can be made on your behalf.

How a Custodial Roth IRA Works

A custodial Roth IRA is a Roth IRA that is opened for a minor. Since most investment platforms, whether they are banks or brokerages, won’t allow a person under the age of 18 to open an account, a parent or guardian must open the account for them. At that point, the person in charge of the account can contribute up to the amount of income earned by the minor, or $6,000—whichever amount is less.

Minors who earn income through babysitting, lawn mowing, or part-time jobs at the family business or a local retailer or restaurant may not wish to stash all their hard-earned money in a retirement account. In this case, contributions can be made on their behalf by parents, grandparents, other family members, or loved ones.

Some families see a Roth IRA as an opportunity to match the child’s donation as a way of encouraging them to save. All of this is allowed as long as the amount contributed doesn’t exceed the amount the child actually earns in a year, or $6,000, if the child earns more than that amount.

How a Spousal IRA Works

In partnerships where one spouse earns income and the other doesn’t, a spousal Roth IRA is an option. All Roth IRAs are subject to income restrictions. In the case of a spousal Roth IRA, the IRS would use the threshold normally designated for couples with two working partners. In 2022, that limit is $214,000. Couples must file their taxes as married filing jointly to qualify for a spousal Roth IRA.

Once the account is established, it acts just like a regular Roth IRA. The holder or their spouse can contribute $6,000 per year (or $7,000, if they are over the age of 50). The ability to open two Roth IRAs despite earning only one income can create a huge savings opportunity for couples.

There is one stipulation to keep in mind: The total of the contributions into both IRAS—the one belonging to the wage earner and the one in the spouse’s name—cannot exceed the total amount of the taxable compensation on their tax return.

The Bottom Line

Individual retirement accounts are by their very existence funded by the individual holding them. If you have a custodial, spousal, or designated Roth IRA, then as long as the contributions don’t exceed preset limits, there is no issue with someone else giving you the money to invest.