How to Turn $7,000 Into $4.1 Million in a Roth IRA for Your Child or Grandchild’s Retirement

Samantha Sykes
May 2
2 min read

If you’re looking for a powerful, tax-advantaged way to set your child or grandchild up for lifelong financial success, opening a Roth IRA could be the best gift you ever give them.

What's something your child/grandchild has that you don't? Time. Help them use it to their advantage.

What is a Roth IRA?

A Roth IRA is a retirement savings account where your investments grow tax-free, and qualified withdrawals in retirement are also tax-free. Contributions are made with after-tax dollars, which means you don’t pay taxes when you take the money out later — a major advantage for young savers with decades of growth ahead of them.

Why Start a Roth IRA for a Child/Grandchild?

Starting early is the secret to building serious wealth through compounding. Here’s why it’s such a smart move:

Tax-Free Growth: Your child's investment grows year after year without being taxed.
Decades of Compounding: A small contribution today can turn into millions over time.
Flexibility: Roth IRAs can also be tapped for a first home or education expenses (following certain rules).
Parental Control: A Roth IRA for a minor is managed by a parent or guardian until adulthood.

Who Qualifies?

The child must have earned income — meaning wages from a part-time job, self-employment income (like babysitting or lawn mowing), or income from a family business. The amount they can contribute is limited to their earned income, up to the annual limit.

2025 Contribution Limits

For 2025, the maximum contribution is $7,000 or the child’s total earned income for the year, whichever is lower.

The Power of a Single Contribution

Imagine this: If a child contributes $7,000 each year starting at age 18 and earns an average 10% annual return, by age 60 their contributions could grow to over $4.1 million.

That’s the magic of starting early.

How Bel Air Lending Can Help

At Bel Air, we believe in empowering the next generation. That’s why we’ve launched an ambitious initiative:

We’re committing $1 million to 1,000 students over the next 10 years — giving $1,000 per student (during their first year) to help them start their Roth IRAs.

Here’s how it works:

Open a Roth IRA with our partner, American IRA.
Fully fund the IRA with $7,000.
Invest with Bel Air Lending.
We’ll deliver a 10% return through your investment — plus gift an extra $1,000 into your IRA!