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February 23, 2009

Guardian IRA

Your Guide



Guardian IRA- also know as Minor IRA.

IRA established and maintained on behalf of an individual who is defined as a minor under state law, or anyone who lacks the capacity to act on his or her own behalf.   Minors may be under the ages of 18 to 21, depending on the state.

The IRA is maintained in the name and tax identification number (TIN) of the minor. The guardian/custodian’s name is also typically included in the account registration with a designation of their relationship to the account. For example:

IRA FBO Jane Smithe
Mary Jones(Custodian)
ABC Company as Custodian.

The documents used to establish the account is completed and signed by the custodian , who also handles all transactions and provide any required authorizations relating to the IRA

Upon reaching the age of majority, as defined by the state, the IRA owner is required to complete a new set of paperwork, to establish him/herself as the authorized signatory of the account.  The name of the custodian is then removed from the account registration.


Referring Cite

IRC § 408(a),  IRC § 408A , Treas. Reg. Sec. 1.408A-3, Q&A 4,

Additional Helpful Information

  • The compensation of the child for the taxable year for which the contribution is made must satisfy the compensation requirements that apply . This includes having eligible compensation, as well as not exceeding the income limits that apply to Roth IRAs
  • The contribution limitations apply to the minor
  • Custodial accounts are also established under SEP IRAs, SIMPLE IRAs and other employer-sponsored plans for participants who are minors or lack the capacity to act on his or her own behalf.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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