|
How Old Do You Have To Be To Open a Schwab Account?
Charles Schwab age requirement limit. How old do you have to be to open an account at Schwab?
Can you use Schwab under 18 years old?
|
Charles Schwab Age Requirement
You must be at least 18 years old to open a Charles Schwab account in the U.S. on your own (without a
custodian). You can still do it under 18, but you’ll need a guardian’s help. Keep reading for
more information.
Age of Majority
The age of majority is the official threshold for becoming an adult in the eyes of the government. In most U.S. states, it's 18, although some places have different age rules for certain activities. To open a standard taxable brokerage account, you must be 18.
Brokerage accounts can have various requirements that allow people under the age of majority to invest. Some U.S. brokerage firms may require a higher age to open a foreign account.
Free Charles Schwab Account
Visit Schwab Website
Custodial Accounts
The two main custodial accounts in the U.S. are the Uniform Transfers to Minors Act (UTMA) account and the Uniform Gifts to Minors Act (UGMA) account. Both are very similar and provide the same tax benefits. UTMA accounts are newer and can hold assets like real estate, while UGMA accounts only hold securities. Most states follow the UTMA, although a few still use UGMA.
To open a custodial account, two individuals are needed: a custodian, who is the adult managing the account, and a minor who is under the age of majority. This is how legal minors can have brokerage accounts.
The custodian isn’t necessarily the one putting money into the account. The grantor does that, and there can be multiple grantors. The custodian can also serve as a grantor.
Anything placed in the account belongs to the minor, whose name and birth date appear on the account. Once the minor reaches the age of majority, every cent in the account is theirs, and the custodian no longer controls it.
If the grantors want to pull out the money they contributed before the minor becomes an adult, they won’t be able to. Deposits into a custodial account cannot be taken back.
For custodial accounts, the age of majority can be 18 to 25, depending on the state. At that time, the account passes to the minor.
Money in a custodial account can be used for any purpose, not just school. Because of this, parents and grandparents might go with other investment accounts.
Where to Open a Custodial Account
Charles Schwab is a very common pick for a custodial brokerage account. There are no account fees,
stock and ETF commissions are $0, and you get many perks from one of
the largest brokers in the world.
Open Charles Schwab Account
Visit Schwab Website
Coverdell Education Savings Plan
This plan is meant for education costs at any level. It needs a beneficiary under 18, just like UTMA/UGMA.
While parents and grandparents often open Coverdell accounts, organizations may also contribute. Institutions can add funds with no income limits, though individuals have income restrictions for Coverdell contributions.
529 Plans
Another popular option for minors is the 529 plan. It’s different from Coverdell accounts because the money can only go toward higher education costs. Like the other minor accounts discussed, there must be a custodian and a minor listed. A 529 plan offers various tax benefits (and potential downsides) compared to a regular brokerage account.
Setting up a 529 plan can be slightly trickier since many online brokerages don’t offer them.
Minor IRA
The last account type we’ll mention is an IRA designed for younger people. It’s similar to a regular Individual Retirement Account, but it has a custodian and a beneficiary who is under 18.
The main rule is that the minor must have earned income to contribute, just like a normal IRA.
Finding Brokerage Accounts for Minors
Many, but not all, brokerage firms provide some of these minor accounts. You’ll often fill out an online application just like you would for a typical account, although some minor accounts are unique enough that some firms require paper forms.
Some broker-dealers may only offer a few of these accounts, or possibly none. For example,
M1 Finance
has a Minor IRA but doesn’t have a 529 plan. Tastytrade doesn’t offer any of the custodial accounts here. Vanguard offers a 529 but not Coverdell.
Today, most minor accounts follow the same pricing as standard accounts, meaning low fees and no commissions on stock trades. However, educational materials can vary a lot.
Certain brokers may also let you set up an automated investing custodial account, which removes a lot of guesswork.
Bottom line? Do your research before opening an account.
Free Charles Schwab Custodial Account
Visit Schwab Website
Updated on 1/3/2025.
I work in investment analytics and have been investing in the market since I was in high school. I enjoy anything that involves lots of strategy (i.e. a good game of chess), which is why I was naturally drawn to investing and researching companies. Outside of investing, I’m a big fan of the outdoors. In summer, you’re most likely to find me kayaking, camping, and hiking in the mountains.
|