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Custodial IRA

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What is a Custodial IRA?

A Custodial IRA is an Individual Retirement Account that a custodian (typically a parent) holds for a minor with an earned income. Once the Custodial IRA is open, all assets are managed by the custodian until the child reaches age 18 or 21 (varies by state). All funds in the account belong to the child, allowing them to get started early on saving money and reap the benefits of compounded growth. You can open either a Custodial Roth IRA or Custodial Traditional IRA, and the respective account benefits and rules apply.

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Custodial IRAs at a glance:

  • Can be either a Traditional IRA or a Roth IRA.
  • Must be transitioned to the child when he or she reaches the "age of majority," typically 18 or 21 years old.
  • Can give children a head start on saving for future needs, such as college tuition or retirement.

Custodial IRA FAQs

Only Traditional IRAs and Roth IRAs can be Custodial IRAs.
Yes, you can transfer a Custodial IRA to Schwab from another institution.
No. All contributions made into the Custodial IRA are considered irrevocable transfers for the benefit of the child.
No. The same contribution and distribution rules that apply to Traditional and Roth IRAs also apply to Custodial IRAs.
Yes. The funds can be used to cover qualified higher education expenses, as long as the educational institution is eligible to participate in the Department of Education's student aid programs. Learn more about additional options including Education Savings Accounts and the 529 Savings Plan.

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Open a Custodial IRA today.        Apply Now or call 866-855-5636.