Custodial IRA Calculator: Project a Child’s Retirement Savings
Use this guide to understand the assumptions, inputs, results, and next steps behind the calculator.
Created by Luis Gonzalez · Last updated July 21, 2026
A custodial IRA is a retirement account opened and managed by an adult for a minor who has earned income. This calculator estimates how contributions made before age 18 could grow, compares modeled Roth and Traditional balances, and shows the effect of a planned college withdrawal.
With the default inputs, a 10-year-old contributes $3,000 per year, earns $5,000, and receives an assumed 8% annual investment return. The calculator projects $24,000 in total contributions, $34,463 at age 18, and $1,283,115 at age 65. Its growth multiplier is 53.5, meaning the projected age-65 balance is 53.5 times total contributions under the model’s assumptions. This is a long-term illustration, not a guaranteed result.
Who Can Contribute to a Child’s IRA?
A child must have taxable compensation from work to contribute to an IRA. The calculator caps the annual contribution at the lowest of the amount entered, the child’s earned income, and the 2026 IRA contribution limit of $7,500. The $7,500 limit is shared across the child’s Traditional and Roth IRAs; it is not a separate allowance for each account type. The IRS explains IRA contribution rules and compensation in its IRA contribution limits guidance.
For the default example, the effective contribution is:
Lowest of $3,000 entered, $5,000 earned, and $7,500 limit = $3,000
Parents or guardians may provide the cash used for a contribution, but the contribution cannot exceed the child’s eligible compensation or the annual limit. Keep records showing the child’s work and pay. Household chores generally do not create taxable earned income; genuine employment or self-employment income may qualify depending on the facts.
Enter the Child’s Age and Savings Assumptions
Enter the child’s current age, annual contribution, account type, and earned income. Then choose an expected annual return and the age when you want to view the projected balance. The model only makes contributions while the child is under 18. The contribution growth setting increases contributions in later years, subject to the annual limit.
The college-withdrawal option models a withdrawal of 25% of the account balance at age 18. It does not calculate whether a withdrawal qualifies for an exception, whether taxes or penalties apply, or whether taking money for college is a good tradeoff. Review account rules before planning to use retirement assets for education.
Compare this projection with a standard IRA growth calculator and learn how account types differ in Roth IRA vs. Traditional IRA: which saves more taxes?. For withdrawal rules, use the Roth IRA Withdrawal Calculator.
Reading the Default Projection
From age 10 through age 17, the model makes eight annual contributions of $3,000, totaling $24,000. It assumes no contributions after age 18. With an 8% annual return, the projected balance at 18 is $34,463.
The model then compounds the balance to age 65 over 55 years. It projects $1,283,115 at that age, of which $1,259,115 is labeled investment growth. These amounts assume a steady 8% return every year, no fees, no missed contributions, and no future withdrawals. Real investment returns vary, and a steady-return projection can make long-term outcomes look more certain than they are.
The calculator’s modeled Traditional comparison applies a flat 22% tax rate to milestone balances. At age 18, it shows $26,881 after this assumed tax; at age 65, it shows $1,000,830. This is a simplified comparison, not a tax forecast. Traditional IRA contributions may or may not be deductible, and qualified Roth distributions follow different tax rules. See the Roth IRA Tax Calculator for tax-focused estimates.
| Scenario | Child’s age | Annual contribution | Earned income | Model result to inspect |
|---|---|---|---|---|
| Smaller contribution | 10 | $1,500 | $5,000 | Lower total deposits and projected balance |
| Contribution limited by earnings | 10 | $5,000 | $2,000 | Effective contribution capped at $2,000 |
| Contribution above IRA limit | 10 | $8,000 | $10,000 | Effective contribution capped at $7,500 |
| Later start | 15 | $3,000 | $5,000 | Fewer contribution years and less compounding time |
These rows show how changing an input affects the model; recalculate to see the exact output for each case. They are not additional precomputed results.
Roth or Traditional: What the Model Can and Cannot Compare
A Roth IRA is funded with after-tax money, and qualified distributions are generally tax-free. A Traditional IRA may offer a deduction depending on income, filing status, and workplace-plan coverage, while distributions are generally taxable. A child with little taxable income may have a different tax situation from the adult managing the account, so a simple fixed tax-rate comparison may not reflect the actual result.
The calculator assumes a 22% tax rate for its Traditional milestone comparison. That 22% rate is a model assumption, not a tax rule or a predicted rate for a child at age 65. It does not calculate a deduction at contribution, future tax brackets, state tax, or tax on a nonqualified distribution.
Custodial accounts also involve ownership and control. The child owns the IRA assets; the custodian manages the account until the child reaches the age of majority under applicable state law. That age and the transfer process can vary. For general IRA distribution rules, consult the IRS Publication 590-B. For qualified Roth distributions, see the Roth IRA Withdrawal Calculator and IRA Withdrawal Tax Calculator.
Formulas Used in the Projection
The calculator uses annual steps. It adds a contribution and then applies investment growth to the existing balance in each later year.
Effective annual contribution =
lowest of entered contribution, child earned income,
and annual IRA contribution limit
Balance after each year =
previous balance + contribution + (previous balance × annual return)
For the default first contribution year:
$0 + $3,000 + ($0 × 8%) = $3,000
In subsequent years, the previous balance earns the assumed return and another contribution is added while the child is under 18. The age-65 output is the repeated annual calculation through 55 years of growth; it is not simply the total deposits multiplied by one year’s return.
Growth multiplier =
projected balance at withdrawal age ÷ total contributions
Using the default result:
$1,283,115 ÷ $24,000 = 53.5
College Withdrawals and Other Tradeoffs
The college option removes 25% of the modeled balance at age 18. A withdrawal reduces the amount left to compound for retirement. Whether a particular withdrawal is taxable or subject to an additional tax depends on account type, contribution basis, earnings, age, and the applicable exception. The calculator does not determine those tax consequences.
Using retirement funds for college can also affect financial-aid calculations and leaves less money invested for later. Compare this approach with education savings alternatives and the family’s other resources. A custodial IRA is not a college account, and the beneficiary cannot be changed to another child as with some education accounts.
A child’s IRA is also subject to investment risk. An 8% assumed return does not mean the account will earn 8% every year. Fees, inflation, changing contributions, and market losses can materially change the eventual purchasing power. To see how much of a future balance may be available as income, consider the IRA Payout Calculator.
Next Steps for a Child’s Retirement Account
Confirm that the child has documented compensation before contributing, and compare the intended deposit with the annual limit. Then test lower return assumptions, a missed contribution year, or a college withdrawal to understand how sensitive the long-term estimate is.
Review the account’s investment options, fees, custodial terms, and transfer rules. For a broader comparison, use the IRA Calculator and Roth IRA Tax Calculator. Treat the age-65 balance as a scenario to revisit over time, not a promise of future wealth.
Frequently Asked Questions
Quick answers to the questions people usually have after running the retirement calculator.
1Can a child contribute to an IRA without a job?
No, the child needs eligible compensation, and the contribution cannot exceed that compensation or the annual IRA limit.
2Can a parent deposit the money instead?
Yes, a parent or guardian can provide the cash, but the child must have enough eligible compensation to support the contribution. Keep records of the child’s work and income.
3Is the 2026 IRA limit $7,500 for each IRA?
No, the $7,500 limit is the combined annual limit across the child’s Traditional and Roth IRAs. The model uses that limit when determining the effective contribution.
4Does an 8% return mean the account will reach the projected balance?
No. The return is an assumption applied steadily by the calculator. Actual investment performance varies and can be negative.
5Should a child use a Roth or Traditional IRA?
A Roth may be attractive when the child’s current tax rate is low, but the best choice depends on eligibility, current tax treatment, future tax rates, and withdrawal plans. Compare the rules rather than treating the calculator’s 22% Traditional-tax assumption as a personal tax result.
6Can the child take money out for college without penalty?
Not always. Roth contribution basis, earnings, account age, withdrawal purpose, and tax rules all matter. This calculator’s 25% withdrawal setting does not establish eligibility for tax-free or penalty-free treatment.