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Custodial accounts, also known as UGMA/UTMA accounts, are brokerage accounts that allow parents or guardians to invest on behalf of their children or dependents. Ownership of these accounts transfers to the minors once they reach legal age (typically 18 or 21, depending on the state). Many brokerages also offer other custodial options like 529 plans, IRAs, and trusts.
The Best Custodial Accounts of 2023
These accounts also offer multiple tax perks. Keep reading to see which custodial account is best for you.
The Best Custodial Accounts
Account Minimum
$0 ($5,000 for Schwab Intelligent Portfolios; $25,000 Schwab Intelligent Portfolios Premium)
Fees
0% ($0 Schwab Intelligent Portfolios; $30/month Schwab Intelligent Portfolios Premium)
Investment Types
Stocks, ETFs, options, futures, mutual funds, money market funds, bonds, crypto trusts, and annuities
Account Minimum
$0 ($5,000 for Schwab Intelligent Portfolios; $25,000 Schwab Intelligent Portfolios Premium)
Fees
0% ($0 Schwab Intelligent Portfolios; $30/month Schwab Intelligent Portfolios Premium)
Investment Types
Stocks, ETFs, options, futures, mutual funds, money market funds, bonds, crypto trusts, and annuities
On Charles Schwab’s website
Charles Schwab
Details
Account Minimum
$0 ($5,000 for Schwab Intelligent Portfolios; $25,000 Schwab Intelligent Portfolios Premium)
Fees
0% ($0 Schwab Intelligent Portfolios; $30/month Schwab Intelligent Portfolios Premium)
Merrill Edge investment account
Account Minimum
$0 ($1,000 Guided Investing; $20,000 Guided Investing with Advisor)
Fees
0% (0.45% to 0.85% for robo-advice and guided portfolios)
Investment Types
Stocks, ETFs, options, mutual funds, annuities, certificates of deposit (CDs), and bonds
Merrill Edge investment account
Account Minimum
$0 ($1,000 Guided Investing; $20,000 Guided Investing with Advisor)
Fees
0% (0.45% to 0.85% for robo-advice and guided portfolios)
Investment Types
Stocks, ETFs, options, mutual funds, annuities, certificates of deposit (CDs), and bonds
On Merrill Edge’s website
Merrill Edge investment account
Details
Account Minimum
$0 ($1,000 Guided Investing; $20,000 Guided Investing with Advisor)
Fees
0% (0.45% to 0.85% for robo-advice and guided portfolios)
Account Minimum
$0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
Fees
0% (0.20% to 0.30% for professionally managed portfolios)
Investment Types
Stocks, ETFs, options, bonds, mutual funds, and CDs
Account Minimum
$0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
Fees
0% (0.20% to 0.30% for professionally managed portfolios)
Investment Types
Stocks, ETFs, options, bonds, mutual funds, and CDs
Vanguard
Details
Account Minimum
$0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
Fees
0% (0.20% to 0.30% for professionally managed portfolios)
Account Minimum
$0 ($25,000 Fidelity Personalized Planning & Advice)
Fees
0% ($0, $3/month, or 0.35% for robo-advisor)
Investment Types
Stocks, ETFs, options, mutual funds, bonds, CDs, annuities, and IPOs
Account Minimum
$0 ($25,000 Fidelity Personalized Planning & Advice)
Fees
0% ($0, $3/month, or 0.35% for robo-advisor)
Investment Types
Stocks, ETFs, options, mutual funds, bonds, CDs, annuities, and IPOs
Fidelity
Details
Account Minimum
$0 ($25,000 Fidelity Personalized Planning & Advice)
Fees
0% ($0, $3/month, or 0.35% for robo-advisor)
TD Ameritrade investment account
Account Minimum
$0 ($5,000 or $25,000 for managed accounts through Schwab)
Fees
0% ($300 one-time fee and $30/month for advisor-managed account through Schwab); $49.95 or $74.95 for no-load mutual funds, $2.25 per futures contract, and $0.65 per options contract
Investment Types
Stocks, ETFs, options, mutual funds, futures, forex, IPOs, and bonds
TD Ameritrade investment account
Account Minimum
$0 ($5,000 or $25,000 for managed accounts through Schwab)
Fees
0% ($300 one-time fee and $30/month for advisor-managed account through Schwab); $49.95 or $74.95 for no-load mutual funds, $2.25 per futures contract, and $0.65 per options contract
Investment Types
Stocks, ETFs, options, mutual funds, futures, forex, IPOs, and bonds
On TD Ameritrade’s website
TD Ameritrade investment account
Details
Account Minimum
$0 ($5,000 or $25,000 for managed accounts through Schwab)
Fees
0% ($300 one-time fee and $30/month for advisor-managed account through Schwab); $49.95 or $74.95 for no-load mutual funds, $2.25 per futures contract, and $0.65 per options contract
Account Minimum
$0 ($500 Core Portfolios)
Fees
0% (0.30% Core Portfolios)
Investment Types
Stocks, ETFs, bonds, options, mutual funds, futures, and CDs
Account Minimum
$0 ($500 Core Portfolios)
Fees
0% (0.30% Core Portfolios)
Investment Types
Stocks, ETFs, bonds, options, mutual funds, futures, and CDs
E*Trade
Details
Account Minimum
$0 ($500 Core Portfolios)
Fees
0% (0.30% Core Portfolios)
Methodology: How We Chose the Best Custodial Accounts
We reviewed more than a dozen custodial accounts to find the best options for lowest fees, ease-of-use, flexible investment choices, and customer service availability. We also sifted through multiple investment platforms to find the best options both for self-directed traders and hands-off investors.
You’ll notice that many of the platforms mentioned in our guide offer the option to both trade on your own or automate your custodial account’s investments.
See our full methodology for rating investing products »
Compare our top picks for the best custodial accounts
Editor’s Rating
0% ($0 Schwab Intelligent Portfolios; $30/month Schwab Intelligent Portfolios Premium)
UGMA/UTMA custodial accounts, custodial IRAs, 529 college savings plans, and education savings accounts (ESAs)
Editor’s Rating
0% (0.45% or 0.85% for automated investing)
UGMA/UTMA accounts and 529 plans
Editor’s Rating
0% (0.20% to 0.30% for professionally managed portfolios)
UGMA/UTMA accounts, 529 college savings plans, and trusts
Editor’s Rating
0% ($0, $3/month, or 0.35% for robo-advisor; 0.50% for advice)
UGMA/UTMA custodial accounts, Roth IRA for Kids, 529 plan, Fidelity Youth Account, and trusts
Editor’s Rating
0% ($300 one-time fee and $30/month for advisor-managed account through Schwab)
UGMA/UTMA accounts, Coverdell Education Savings accounts, and 529 plans
Editor’s Rating
0% (0.30% Core Portfolios)
UGMA/UTMA custodial accounts, IRA for Minors, and Coverdell ESA accounts
Custodial Accounts Frequently Asked Questions
A custodial account allows parents or guardians to invest on behalf of children and/or dependents until those minors reach their state’s age of majority. These accounts also have no income or contribution limits, and you can make early withdrawals without racking up any penalties.
Parents can make withdrawals from the account at any time, as long as the withdrawal directly helps the minor.
The child or account beneficiary is responsible for taxes, but each parent or guardian must file taxes on behalf of their minor. However, the account beneficiary won’t incur taxes in 2023 if they amass no more than $1,250 in unearned income. The next $1,250 the custodial account earns is taxed at the child’s tax rate.
In addition, any income earned in excess of $2,500 is taxed at the parent’s income tax rate. But with UGMA accounts, any contributions to the beneficiary’s account is technically regarded as a “gift” and will incur a federal gift tax. However, you won’t run into any gift taxes as a single individual if your contributions don’t exceed $17,000 per year. The limit for couples is $34,000.
Best for All Types of Investors
Charles Schwab
Known as the Schwab One Custodial Account, this account offers investors several perks. These include a $0 minimum opening deposit, $0 account setup and maintenance fees, and commission-free stocks and ETFs. In addition, you can invest in mutual funds and other securities and utilize investment research and other tools.
With Schwab Stock Slices, you can invest in fractional shares as long as you meet the $5 minimum requirement. And as with all custodial accounts, won’t have to worry about any contribution limits. Parents and guardians might also consider Schwab’s custodial IRAs (you can open these as a traditional or Roth IRA), 529 college savings plans, and education savings account (ESA).
Another advantage of Schwab’s custodial account is that it isn’t just for self-directed investors. You can automate your investments by setting up the account through the Schwab Intelligent Portfolios or Schwab Intelligent Portfolios Premium robo-advisors. Just note that you’ll need a minimum of $5,000 for the former and at least $25,000 for the latter.
Once the account beneficiary reaches legal age, they’ll retain complete ownership of the account’s earnings and can then utilize additional Schwab products if so desired.
What to look out for: If you decide to take the automated investing route for your custodial account, you’ll need at least $5,000 for Schwab Intelligent Portfolios and $25,000 for Schwab Intelligent Portfolios Premium.
Charles Schwab Brokerage Account Review
Best for Bank of America Clients
Merrill Edge investment account
Merrill Edge lets you invest for your minor without running into any minimum opening deposits, annual fees, or account maintenance fees. Merrill Edge also offers commission-free stocks, ETFs, and options. And you can choose the robo-advisor route with Merrill Guided Investing or Merrill Guided Investing with an Advisor.
If you’re already a Bank of America client, you can fund the account by linking your existing Bank of America account. Plus, Merrill Edge allows for checks, wire transfers, and transfers or rollovers from existing accounts.
In addition to its custodial accounts, Merrill Edge offers a vast range of other competitive products, including automated investing accounts (robo-advisors), IRAs, 529 plans, retirement calculators, margin accounts, and more.
Merrill Edge also offers 24/7 phone support and live chat.
What to look out for: Annual fees for Merrill Edge’s automated accounts — Merrill Guided Investing and Merrill Guided Investing with an Advisor — are on the higher side. You’ll incur a 0.45% fee for the former and a 0.85% fee for the latter.
Best for Mutual Funds
Vanguard
A behemoth in the retirement investing and mutual funds space, Vanguard also offers some competitive features with its custodial accounts. There aren’t any opening deposit, maintenance, or account transfer fees, and you can automate transfers from both your bank account and other Vanguard accounts.
Vanguard allows for investments in stocks, bonds, Vanguard mutual funds, non-Vanguard funds, and more. Plus, with Vanguard Personal Advisor Services, you can skip out on the self-directed investing route and take advantage of robo-advice paired with ongoing financial advisor guidance. Note, however, that you’ll need at least $50,000 to get started with this service, and you’ll be responsible for a 0.30% annual fee.
Vanguard’s suite of investment products also features 529 college savings plans and trusts. And if you’re looking to deepen your investing knowledge before and/or after you set up a custodial account, the brokerage offers an extensive selection of resources (investing tools and calculators, market news and perspectives, and educational guides) to help you do so.
What to look out for: Vanguard doesn’t currently offer fractional shares, and options contracts will cost you $1 (many brokerages charge $0.65 per contract).
Vanguard Brokerage Account Review
Best for Low Fees
Fidelity
Fidelity’s custodial account lets you build wealth through stocks, ETFs, options, bonds, mutual funds, and much more. Plus, the account has no minimum opening requirements or fees, and any stocks, ETFs, or options the account holder invests in are commission-free.
Its custodial offerings are also supplemented with account perks like Fidelity Viewpoints, an online center with expert commentary on investing strategies, markets, and much more. In addition, Fidelity’s Planning & Guidance Center offers tools to help you meet investing goals.
Fidelity offers multiple other minor investment account options beyond UGMA/UTMA custodial accounts. These include its Roth IRA for Kids account, 529 plan, Fidelity Youth Account (this account lets children between the ages of 13 and 17 invest on their own), and trust accounts.
What to look out for: Fidelity’s automated investing accounts — Fidelity Go and Fidelity Personalized Planning & Advice — don’t support custodial accounts.
Best for Active Traders
TD Ameritrade investment account
TD Ameritrade offers a vast range of accounts for youth. These include its UGMA/UTMA accounts, Coverdell Education Savings accounts, and 529 plans (TD Ameritrade is no longer offering 529 plans to new clients).
And like all of the other brokerages listed above, you won’t have to worry about minimum deposits to get started. TD Ameritrade also offers a competitive investment selection. It gives you access to commission-free stocks and ETFs, and it provides more than 13,000 mutual funds.
If you’re a hands-off investor and would rather leave the day-to-day trading decisions to the professionals, you’ll have to set up an account through Charles Schwab. TD Ameritrade is no longer accepting new clients for any of its managed portfolios, but you can still open an automated investing account through Schwab Intelligent Portfolios or Schwab Intelligent Portfolios Premium.
What to look out for: Schwab acquired TD Ameritrade, so many of the brokerage’s offerings have merged with Schwab’s. However, both platforms still offer standalone products, so be sure to keep this in mind as you weigh different account options.
TD Ameritrade Brokerage Review
Best for Automated Investing
E*Trade
E*TRADE offers account options for all types of investors, but it provides a particularly competitive suite of custodial products. These include its standard UGMA/UTMA custodial account, IRA for Minors, and Coverdell ESA accounts. Its standard custodial account comes allows for commission-free stocks, ETFs, and options.
However, you’ll pay $1 per bond, and bond minimums can range from $10 to $250. Fees for funds vary, but E*TRADE currently offers more than 4,500 no-load, no-transaction-fee mutual funds. And those who prefer robo-advice can build wealth through its expert-managed automated investing account,Core Portfolios (note that you’ll need at least $500 to set up this account).
Its custodial accounts also have no income or contribution limits, and they come with a free debit card, checking perks, and online bill pay.
What to look out for: E*TRADE doesn’t offer fractional share trading.
Other Custodial Accounts We Considered
- Acorns: Acorns invests your money into a personalized portfolio of ETFs, so you don’t have to worry about the trading decisions in your account. One downside, however, is that you’ll pay a $5 monthly fee for custodial accounts.
- Ally Invest: Ally Invest offers a vast collection of investment products, and it gives you the option to set up a self-directed custodial account or automated custodial account. One thing to consider, however, is that the platform doesn’t offer any no-transaction-fee mutual funds.
- Firstrade: Firstrade provides commission-free trading for stocks, ETFs, options, and mutual funds. The platform also offers international investing accounts, but it doesn’t provide any managed accounts or automated investing options.
- Fidelity Youth account: Launched in 2021, the Fidelity Youth account places the power in the minors’ hands. The account allows teens between the ages of 13 and 17 to invest on their own, so it isn’t exactly a traditional custodial account. But like the standard UGMA/UTMA accounts, the Youth Account simply becomes a regular Fidelity brokerage account once the child reaches age 18.
- M1 Finance: Offering a combination of self-directed trading and automated investing for stocks and ETFs, M1 Finance is a competitive platform in the online brokerage space. However, only M1 Plus members get access to custodial accounts, and the M1 Plus subscription costs $125 per year.
- Stash: Stash gives investors access to automated investing (for both stocks and ETFs), round-ups, banking, and more. The platform also offers retirement portfolios and family financial advice packages. One downside to consider, though, is that you’ll pay a $9 monthly fee — through the Stash+ plan — to utilize a custodial account.
- Stockpile This investment platform is a great wealth-building option for kids and teens. It offers no minimums, no recurring fees, and no gift card or funding fees (you can buy gift cards that are redeemable for different stocks in your child or dependent’s account). One downside is that, while Stockpile offers thousands of stocks, it only offers two account types: individual accounts and custodial accounts.
- Loved: Loved is a financial education app offering investment accounts and financial literacy resources for parents who want to get their kids (or other dependents) into investing at an early age. It lets you invest in themes, goals, and companies that align with your preferences, and you can set up custodial accounts. However, it may not be the best choice for those who want a wider range of account types and investment choices.
