Charles Schwab Custodial Accounts Highlights
- Schwab has custodial accounts in UTMA and UGMA formats.
- Custodial accounts at Schwab have no annual fees.
- Some trades inside a custodial account will be commission-free.
- Both U.S. and non-U.S. residents can open custodial accounts at Schwab.
Do you want a simple way to save money for a child or grandchild and get some tax benefits? Charles Schwab might be a good option.
Schwab’s Custodial Account
The Schwab One® Custodial Account is a brokerage account for a minor. You can open it as a UGMA or UTMA account. UTMA is the newer type and is used in most states now. Both formats have tax advantages and Schwab charges very little to use them. You can manage the account yourself or choose an automated option.
Available Investments
With a self-directed custodial account at Schwab, you can buy and sell these investments:
- Stocks, including OTC stocks
- Options
- Mutual funds, closed-end funds, and ETFs
- Bonds and other fixed-income investments
You can’t set up a custodial account to use margin. That means you can’t sell stocks short, and most advanced option strategies are not available. Schwab’s robo program, Intelligent Portfolios, only trades ETFs.
Custodial Account Fees and Commissions
Custodial accounts at Schwab that you manage yourself have
no commissions on online trades of U.S.-listed stocks and ETFs. There is no fee to open, keep, or close the account. Schwab does not ask for a minimum deposit for self-managed custodial accounts.
Robo custodial accounts are a bit different. You need $5,000 to open an automated account, no matter what tax type it is. Schwab doesn’t charge management fees for robo accounts except for the expense ratios on the ETFs inside.
Free Charles Schwab Custodial Account
Visit Schwab Website
Tax Breaks
Schwab’s custodial accounts in UTMA or UGMA form also bring useful tax benefits. The first $19,000 in contributions for 2025 from one person is not taxed as a gift. Married couples can give twice as much. There is no set contribution limit, and anyone—not just family—can add money to the account.
Once money is in the account, investment earnings under $1,350 in a year are tax-free.
The next $1,350 is taxed at the minor’s rate, which is usually low.
Opening a Custodial Account at Schwab
You can open a custodial account
on Schwab’s mobile app or website. On the website, find the orange button at the top for new accounts. Scroll down to see the link for all accounts (the custodial account is not in the first list). On the next page, look for the “Education & Custodial” tile. Click it to go to the custodial account section.
On the app, log in and tap the More icon in the bottom-right. The next page has a link to open a new account. Scroll until you find the custodial account option.
Schwab is different from most other companies because it lets non-U.S. residents open custodial accounts. They must use a paper application. The filled form can be uploaded to Schwab’s website using the Message Center (if you already have a login). U.S. residents can use the pdf form if they prefer.
No matter how you open the account, you’ll need information for both the minor and the adult who will manage the account.
Education for Youngsters
Schwab’s website has helpful resources for beginners. A good place to start is under the Learn tab at the top. For people new to investing, there is a New Client Welcome Center (you’ll find the link under Learn).
There are self-guided courses on many topics. Some are more complex, like “Stock Trading with Technical Analysis,” but there are also simple guides:
- Your First Stock Trade
- Common Trading Mistakes to Avoid
- Dividend Basics
Charles Schwab Custodial Account Recap
Schwab offers a strong custodial account service with very low fees and good learning tools.
Free Schwab Custodial Account
Visit Schwab Website
Updated on 5/27/2025.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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