Custodial Account

Firstrade Custodial Account

Firstrade's Custodial Account can help you save for your child's education and build a nest egg that will contribute to their future financial stability. A Custodial Account lets you manage a minor's assets on their behalf, gives you a gift tax advantage and the flexibility to invest in any combination of stocks, mutual funds, bonds and ETFs.

What is a custodial account?

A custodial account is an investment account set up for a minor under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) based upon your state of residence. The account is administrated by a custodian, who will manage the account for the minor’s benefit until he or she reaches the age of majority. Assets held in the account are owned by the minor under his or her name and social security number. Assets in the account are turned over to the minor once he or she reaches the age of majority (18 or 21 depending on the state).

Benefits of a custodial account

Tax Benefits

  • You can contribute up to $14,000 per person annually ($28,000 for married couples filing jointly) with no gift tax incurred.
  • The first $1,000 in 2014 ($1,050 in 2015) earnings is tax-free, the next $1,000 of earnings is taxed at the child's rate, and earnings over $2,000 in 2014 ($2,100 in 2015) are taxed at the adult's rate.

Felixibility

  • Firstrade's custodial account doesn't have contribution limits, custodian income limits or minimum deposit requirements. You can withdraw the money for any purpose without time restrictions, as long as it is for the benefit of the minor.
  • You can invest in stocks, bonds, mutual funds and ETFs.

It's easy to open a Firstrade custodial account

Opening a custodial account is simple, just open an account online or mail/fax us the following documents:

Please note: Accounts are held under the minor's name and social security number and there can only be one custodian per account.


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