Fidelity Custodial Account
Published Aug. 28, 2024
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Adults can use a Fidelity custodial account to invest and save on behalf of a minor. The money belongs to the child but is managed by the account's custodian. The child will gain control of the account once they reach a certain age. Custodial accounts are easy to open online -- keep reading to see how to open one with Fidelity.
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One of the main benefits of a Fidelity custodial -- or Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA) -- account is that there are no limits on contributions or gifts.
Other benefits include access to Fidelity's full range of investment options and the ability to manage investments and savings for a child.
Other benefits of a Fidelity custodial account include:
Fidelity custodial accounts may also have tax advantages:
Up to $1,250 of earnings may qualify for federal income tax exemption. An additional $1,250 may be taxed at the child's tax rate, which is often lower than the parent's tax rate.
Individuals can contribute up to $18,000 (married couples up to $36,000) in 2024 without having to pay a gift tax. The contributions themselves are not tax deductible.
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Opening a custodial account with Fidelity is a straightforward process that doesn't take long. Submit the required information and set up a username and password and you can start funding the account.
Most people link their bank account automatically while logged into the Fidelity website. You will need the username and password for your bank account. If Fidelity can't verify your account, you may be asked to upload additional documentation, like a voided check.
If your account doesn't connect automatically, you can manually enter the routing number and account number, and follow Fidelity's steps to verify your account. That usually involves looking for two small (under $1) deposits to your account within a few days. Once you verify your account, those small deposits will be taken back by Fidelity.
To link a bank account to your custodial account in person or by mail, contact Fidelity customer service to ask for instructions. You'll likely need to mail these items:
Whenever you open a new financial account in the U.S., you'll be asked for identity and employment information, and answers to questions about whether certain securities industry regulations apply to you. For a custodial account, you'll also need to provide information about the minor you are opening the account for.
Once your information has been verified, you can create a username and a password. Then you can fund your account.
Funding options include the following:
Investment strategies for custodial accounts include:
Talk to a financial advisor at Fidelity if you're not sure what strategy is right for your situation.
A Fidelity custodial account allows adults to invest and build up savings for a child. Investment options include stocks, bonds, mutual funds, options, CDs, and fractional shares.
A custodial brokerage account differs from other youth brokerage accounts such as the Fidelity Youth Account or Roth IRA for Kids in that there are no deposit, investment, or earning limits.
Fidelity offers the following types of youth accounts:
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5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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Yes, Fidelity allows custodial (or UGMA/UTMA) accounts.
The custodian must transfer the custodial account to a child once they reach a certain age (between 18 and 25, depending on what state the child lives in). Fidelity will notify the custodian when it is time to transfer the account.
The key differences between a Fidelity custodial account and a Fidelity 529 plan are as follows:
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Fidelity disclosure
Fractional share quantities can be entered out to 3 decimal places (.001) as long as the value of the order is at least $1.00. Dollar-based trades can be entered out to 2 decimal places (e.g. $250.00)
Fidelity disclosure
Fractional share quantities can be entered out to 3 decimal places (.001) as long as the value of the order is at least $1.00. Dollar-based trades can be entered out to 2 decimal places (e.g. $250.00)
Fidelity disclosure
Fractional share quantities can be entered out to 3 decimal places (.001) as long as the value of the order is at least $1.00. Dollar-based trades can be entered out to 2 decimal places (e.g. $250.00)
