Want to help your child jump-start their retirement savings? Consider opening a custodial IRA. An adult controls this account on behalf of a minor with earned income. Like a standard IRA, it offers benefits such as compound growth and tax advantages.
We reviewed 27 leading firms to identify the best custodial IRAs of 2024. Our assessments are based on each firm’s fees, investment options, educational resources, security features, value-added products and more.
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INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Best custodial IRAs
- Fidelity: Best overall.
- Charles Schwab: Best for educational resources.
- E*TRADE: Best for mobile investors.
- JPMorgan: Best for in-depth, personalized advising.
- Vanguard: Best for existing Vanguard clients.
- PNC Investments: Best for in-person banking.
Why trust our investing experts
Our team of experts evaluate leading investing products and analyze a multitude of data points to help you find the best product for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 27 leading financial institutions reviewed.
- 4 levels of fact-checking.
- 70+ data points analyzed.
Best overall
Fidelity
Blueprint Rating
Account minimum
$0
Why it’s the best
Fidelity has a competitive fee schedule, an extensive investment lineup and a wide range of educational resources. Opening and funding a custodial IRA is easy with no account minimums or trading fees and $0 stock and ETF trades. Fidelity even offers a dedicated learning center to teach teens about money. Finally, should you run into any snags, customer service reps are available 24/7 via phone. Live chat is available during operating hours.
Pros and cons
Pros
- Thousands of stocks, mutual funds and exchange-traded funds.
- A learning center to teach your teen about investing and other personal finance topics.
- A secure platform with SSL technology, two-factor authentication and biometric logins.
Cons
- No 24/7 live chat support.
- A 0.4% to 0.7% annual advisory fee for managed accounts.
- A $50,000 account minimum for Fidelity Wealth Services.
Best for educational resources
Charles Schwab
Blueprint Rating
Account minimum
$0
Trading fee
$0
Why it’s the best
Schwab offers many of the same features as Fidelity, while pulling ahead in some categories and falling short in others. Like many firms, it has no account minimums or trading fees. But it shines with its educational materials. These include retirement calculators, market commentary, and planning and retirement guides. For a parent investing on behalf of their child, such resources can be invaluable.
Pros and cons
Pros
- Third-party funds and an extensive lineup of in-house mutual funds and ETFs.
- Various educational resources, including regular podcasts.
- Futures, fractional shares, bonds, Treasurys and options.
Cons
- A $25,000 minimum for Schwab Intelligent Portfolios Premium.
- No online courses.
- Opening a custodial IRA requires downloading, completing and mailing an application.
Best for mobile investors
E*TRADE
Blueprint Rating
Account minimum
$0
Trading fee
$0
Why it’s the best
E*TRADE offers the usual $0 account minimums and trading fees. But it has a significant advantage over its competitors: the presence of two mobile apps. The first is tailored to beginners. You can trade stocks, ETFs, mutual funds and options while accessing financial news and researching on the fly. Advanced investors can also trade futures and execute options strategies on Power E*TRADE. This app provides streaming quotes, earnings, dividends and more.
Pros and cons
Pros
- Apps for both new and experienced investors.
- The ability to open a custodial IRA online using Docusign.
- The ability to set up recurring contributions.
Cons
- No BBB accreditation.
- No SSL technology.
- No 24/7 customer service.
Best for in-depth, personalized advising
JPMorgan
Blueprint Rating
Account minimum
$0
Why it’s the best
Do you have a client relationship with JPMorgan or want to start one? Then opening a custodial IRA here could be a no-brainer. To do so, you must meet with a private client advisor in person at a local branch. Your private client advisor works with you one-on-one to build a financial plan. By opening a custodial IRA, you can bring your child into the fold to benefit from JPMorgan’s expertise and resources.
Pros and cons
Pros
- Great for families with existing JPMorgan client relationships.
- Personalized advice and guidance from a private client advisor.
- A Wealth Plan tool that allows you to track your progress and adjust your strategy.
Cons
- Opening a custodial IRA requires meeting with a private client advisor at a local branch.
- A 0.7% to 1.45% annual fee for a private client advisor.
- No 24/7 customer service or chat support.
Best for existing Vanguard clients
Vanguard
Blueprint Rating
Account minimum
$0
Trading fee
$0
Why it’s the best
Cost saving is the name of the game with Vanguard. Beyond the typical $0 account minimums and trading fees, the firm also offers expense ratios lower than the industry average. The process for opening a custodial IRA differs depending on whether you’re an existing customer. If you have a Vanguard account, log in, click the “Transact” tab, choose the “Open a New Account” option and follow the wizard to open a custodial IRA.
Pros and cons
Pros
- A wide range of low-fee, broadly diversified Vanguard ETFs and mutual funds.
- One of the largest, oldest and most renowned asset management companies.
- Various educational resources, including articles, videos and webinars.
Cons
- No online courses or in-house research.
- No bitcoin ETFs.
- No live chat support.
Best for in-person banking
PNC Investments
Blueprint Rating
Account minimum
$0
Trading fee
$0
Why it’s the best
Do you bank with PNC and appreciate the personal touch that comes with face-to-face interactions? Then adding a custodial IRA to your portfolio could be a smart move. With no minimum account requirements or trading fees, PNC offers a straightforward way to help your child save for retirement.
Pros and cons
Pros
- No account minimums.
- $0 commissions on stocks, ETFs and options.
- A wide range of articles, videos, webinars, online courses and third-party research.
Cons
- No option to open a custodial IRA online.
- No email or chat support.
- No in-house research reports.
Compare the best custodial IRAs
| CUSTODIAL IRA | ACCOUNT MINIMUM | OPENING FEE | COMMISSION ON U.S. STOCKS AND ETFS | |||||
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Methodology
Our team reviewed and researched some of the largest online brokerages in the U.S. to rank the best for their custodial IRA offerings. We sent a digital survey to each company reviewed. Our researchers verified the survey data and confirmed any missing data points by contacting each company directly and via online research.
From the 27 brokerages surveyed, we selected the six candidates that ranked the highest based on 11 scoring categories: key features, account types offered, investment types available, educational resources, retirement-specific educational resources, customer service, accessibility, security and customer rating, account and trading fees, company products, and insurance.
- Each category was composed of numerous subcategories. For example, the “investment types” category had subcategories corresponding to whether ETFs, mutual funds, Treasurys, bonds, annuities and more were available.
- Subcategories were scored based on the data we received and assigned weights, which were aggregated to form the overall scores and weights for each category. Scores were then tabulated on a 0.00 to 1.00 scale. The top score of 0.98 was curved up to a 5.00 rating.
Why other online brokers didn’t make the cut
We began by excluding firms that didn’t offer custodial IRAs.
We also excluded firms that offered other types of custodial accounts. These included Uniform Gifts to Minors Act and Uniform Transfers to Minors Act accounts. UGMA and UTMA accounts are taxable investment accounts. They have no contribution limits.
Investment types
We assessed each firm’s breadth of offerings. Access to a wide range of stocks, ETFs, mutual funds and other instruments benefits DIY investors.
“In general, seek a well-established, reputable custodian with a diverse investment selection and competitive fees across all their services,” said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital.
Education resources
Given that the custodial IRA’s focus is securing a solid financial future for a minor, we emphasized educational resources. Online brokers that frequently published many articles, videos, webinars, courses, newsletters and podcasts scored higher.
Customer service
Firms that offered 24/7 customer service and support through multiple channels, such as phone, email and live chat, received higher scores.
Security
We assessed each provider’s security measures. These included two-factor authentication, SSL technology and biometric logins on mobile.
Fees
Fees also played a large role. We wanted to ensure that the brokers we ranked didn’t have too many barriers to entry.
Final verdict
Our pick for the best overall custodial IRA provider is Fidelity. Investors looking for an accessible option will appreciate that the firm has no account minimums. It also doesn’t charge commissions on stocks, ETFs or mutual funds, which makes it easier to start investing.
Fidelity offers an extensive lineup of in-house funds. But what really sets Fidelity apart is its comprehensive suite of educational resources, including materials designed for teens. Fidelity is a fantastic choice to teach your child about investing and other personal finance topics.
What is a custodial IRA?
A custodial IRA is owned by a minor with earned income but managed by an adult custodian. This retirement account allows a child to save money early and reap the benefits of compound growth. It also has tax advantages.
Who manages a custodial IRA?
As the account custodian, you manage the custodial IRA. You decide how much to contribute and what to invest in. You also receive statements.
But your child is the account owner. This means the account funds must be used for their benefit. Once your child reaches a certain age — 18 or 21 in most states — they must transfer the assets to an account in their name.
Contributing to and investing in a custodial IRA
Your child must have earned income to contribute to a custodial IRA. This can come from formal employment, such as a part-time job, or self-employment, such as babysitting or mowing lawns.
Like regular IRAs, custodial IRAs have contribution limits. For 2024, the limit is $7,000, or your child’s earned income, whichever is less.
The money in a custodial IRA can be invested in various assets. These include stocks, bonds, mutual funds and ETFs.
Benefits of opening a custodial IRA for your child
The main benefit of opening a custodial IRA for your child is kick-starting tax-deferred or tax-free growth.
A custodial traditional IRA allows you to make pretax contributions, which grow tax-deferred. Withdrawals in retirement are taxed as ordinary income. A custodial Roth IRA allows you to make after-tax contributions, which grow tax-free. Withdrawals in retirement are also tax-free.
Most children don’t have enough earned income to benefit from lowering their taxable income today. So a custodial Roth IRA may be better than a custodial traditional IRA.
Here’s an example of how a custodial Roth IRA can benefit your child. Someone who begins with no initial investment but contributes $3,000 annually starting at age 15 could accumulate more than $1.2 million by age 65, assuming a 7% annual compounding rate. Someone who starts at age 25 could accumulate nearly $600,000, assuming the same initial investment and annual compounding rate.
Our partners
Datalign Advisory
Get Matched
Via Datalign’s website
Connect
Match with a financial advisor from a network of vetted fiduciaries.
Get started
Complete the questionnaire and match with an advisor for a free, no-obligation call.
Wealthramp
Via Wealthramp’s website
Find your match
Connect with fee-only advisors who fit your priorities
Build your wealth
Review your vetted advisor matches and set up a free consultation
J.P. Morgan Personal Advisors
Via J.P. Morgan’s website
Create a personalized financial plan
Get matched to expert-built portfolios, and receive ongoing advice and annual check-ins to ensure your plan is on track.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Frequently asked questions (FAQs)
There’s no age limit for custodial IRAs. So, technically, you can open a custodial IRA for your baby. But remember that a child must have earned income to contribute.
When your child reaches a certain age — 18 or 21 in most states — they must open a new account in their name and transfer the assets from the custodial IRA.
How a custodial IRA is taxed depends on whether it’s a traditional or Roth account.
You contribute pretax dollars to a traditional IRA. Your money grows tax-deferred. Withdrawals in retirement are taxed as income. You contribute after-tax dollars to a Roth IRA. Your money grows tax-free. Withdrawals in retirement are also tax-free.
