Can I Gift My Roth IRA to a Grandchild?Estate Matters Retirement Accounts
The answer depends on whether you want to make the gift while you're alive or after you've passed.
While You're Living
An IRA (whether Traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA) is registered to your name. Unfortunately, the tax code does not allow you to transfer it to anyone else, except when a divorce decree stipulates the retirement account be divided with an ex-spouse.
That said, there is a potential work-around....
If your grandchild has "taxable compensation" (think: earned income), they are eligible to contribute their taxable compensation up to a maximum of $5,500 to their own Roth IRA. You can help fund this by taking tax-free distributions from your Roth IRA and giving those funds to your grandchild, who will then contribute the money into their own Roth IRA.
So if your teenage grandchild earned, say, $3,000 from summer work, you can help them fund their Roth IRA up to $3,000. If they're a young adult earning $40,000 but are busy paying off student loans, they'll be limited to contributing $5,500 maximum of the funds you give them.
Note: if your grandchild is a minor, that will involve a Custodial Roth IRA with the custodian (perhaps a parent) handling the transaction.
After You've Passed
Another approach is to designate (while you're alive) your grandchild a primary beneficiary of your Roth IRA.
When you pass, they will inherit the account and--under current law--then have the opportunity to stretch Required Minimum Distributions over their own lifetime. Of course, they could also distribute the entire account immediately.
There are rumblings about changing the rules for who gets to stretch distributions over a lifetime. But it could still be great intergenerational wealth planning and potentially result in ongoing tax-free growth for your grandchild.