Robinhood does not offer custodial accounts

Robinhood does not provide custodial accounts for minors. A custodial account is an investment account opened by an adult (the custodian) on behalf of a child, with the adult managing trades and decisions until the child reaches the age of majority. Robinhood's platform requires account holders to be at least 18 years old and to open and manage their own accounts.

This is a hard limit on Robinhood's service. If you want to invest money for a minor, you will need to use a different brokerage that explicitly supports custodial accounts, such as Fidelity, Charles Schwab, E*TRADE, or Vanguard.

Key Takeaways

  • Robinhood requires all account holders to be at least 18 years old and does not offer custodial or guardian-managed accounts for minors.
  • Custodial accounts exist specifically to let parents or guardians invest on behalf of children and transfer the account to them at age 18 or 21.
  • Brokerages that do offer custodial accounts include Fidelity, Charles Schwab, E*TRADE, Vanguard, and most traditional banks.
  • Money in a custodial account belongs to the child legally, even though an adult manages it, and becomes the child's property when they reach the age of majority.

How custodial accounts work

A custodial account is opened by a parent, grandparent, or other adult guardian in the child's name. The adult controls all trading and investment decisions while the child is a minor. The account is held in the child's name with the custodian listed as the managing adult.

When the child reaches the age of majority—18 in most states, 21 in a few—the account transfers to their full control. They can then manage it themselves or leave it as is. The money in the account belongs to the child from day one, even though the adult is making the decisions.

Custodial accounts come in two legal forms: UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act). UTMA is more flexible and is available in all 50 states; UGMA is older and available in most states. The differences matter mainly for tax purposes and what types of assets can be held. Your chosen brokerage will handle which form they use.

Why Robinhood does not offer them

Robinhood's business model is built around a mobile-first, self-directed trading platform. The company does not offer advisory services, financial planning, or account management by staff. Custodial accounts require additional compliance work, account monitoring, and customer service—things Robinhood has chosen not to provide.

Custodial accounts also carry specific tax reporting requirements. The custodian must file tax forms for the child each year, and there are rules about how much income the account can generate before taxes are owed. Robinhood's automated system is not designed to handle this complexity.

Brokerages that do offer custodial accounts

If you want to open a custodial account, these brokerages all support them:

  • Fidelity — Offers UGMA and UTMA accounts with no account minimums and access to stocks, ETFs, mutual funds, and bonds.
  • Charles Schwab — Provides custodial accounts with no minimums and a full range of investment options.
  • E*TRADE — Supports UGMA and UTMA accounts with stocks, ETFs, options, and mutual funds.
  • Vanguard — Offers custodial accounts focused on long-term investing in mutual funds and ETFs.
  • Your bank — Most traditional banks and credit unions offer custodial accounts, often with lower investment minimums than brokerages.

Each brokerage has slightly different fees, investment options, and minimum account balances. Compare a few before opening an account to see which fits your needs and investment style.

What to do if you want to invest for a minor

If you have money you want to invest for a child and Robinhood is your preferred brokerage, you have a few options. The most straightforward is to open a custodial account at a different brokerage that supports them. You can keep your own Robinhood account and use the custodial account solely for the child's money.

Another option is to wait until the child turns 18 and then help them open their own Robinhood account. At that point, they can manage their own investments with your guidance. This works well if the child is a teenager and you want to teach them about investing.

A third option is to invest the money in your own name and plan to transfer it to the child later, though this has tax and legal complications. Consult a tax professional or attorney before doing this, as it may trigger gift taxes or create confusion about who owns the money.

Tax treatment of custodial accounts

Money in a custodial account grows in the child's name, which usually means lower taxes than if it grew in the parent's name. The first portion of investment income each year is tax-free for the child (this amount changes yearly). Income above that threshold is taxed at the child's rate, which is typically lower than the parent's rate.

However, there is a catch called the kiddie tax. If the child is under 18 (or under 24 in some cases and still a full-time student), investment income above a certain threshold is taxed at the parent's rate, not the child's rate. This prevents parents from simply shifting income to children to avoid taxes. The threshold and rules change yearly, so check the IRS website or speak with a tax professional for current numbers.

The custodian must file a tax return for the child each year if income exceeds the filing threshold. This is one reason custodial accounts require more administrative work than a regular brokerage account.

Frequently Asked Questions

Can I open a Robinhood account for my child and manage it myself?

No. Robinhood requires the account holder to be at least 18 years old and to open the account themselves. You cannot open an account in your child's name or manage an account on their behalf. The account must belong to and be managed by someone who is 18 or older.

What is the difference between a custodial account and a regular investment account?

A custodial account is opened in the child's name and managed by an adult until the child reaches 18 or 21. A regular account is opened by and belongs to the person who opens it. Custodial accounts have tax advantages and are designed specifically for long-term investing for minors. Once the child reaches the age of majority, the custodial account becomes their property and they control it.

Can I move money from a custodial account to Robinhood once my child turns 18?

Yes. Once your child turns 18, the custodial account becomes theirs to control. They can then transfer the money to a Robinhood account or any other brokerage they choose. The transfer process typically takes a few business days and is handled by the original brokerage.

Are there any brokerages with no minimum balance for custodial accounts?

Yes. Fidelity and Charles Schwab both offer custodial accounts with no minimum balance requirement. Most other major brokerages also have low or no minimums. Check the brokerage's website or call them directly to confirm current minimums, as these can change.

What happens to a custodial account if the custodian dies?

The account belongs to the child, not the custodian, so it does not go through the custodian's estate. However, a new custodian must be named to manage the account until the child reaches the age of majority. The brokerage will work with the child's parents or guardians to name a successor custodian. Consult an attorney if you have questions about succession planning for a custodial account.