Top custodial account opening cost and fees (maintenance, inactivity, management), investments assets options for minors (children).

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Custodial Accounts with Firstrade

Are you interested in opening a brokerage account for a minor? If so, you should be aware of Firstrade’s account services. The broker-dealer offers UTMA/UGMA accounts, which are administered by a custodian for the benefit of a minor. Here are the details:

UTMA/UGMA Accounts at Firstrade

An account for an adolescent can be established at Firstrade under either the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA), depending on the state of residence.

In either case, the account’s assets are legally owned by the minor and are turned over to the minor once he or she reaches 18, 21, or 25 (depends on state law). Until that time, the account is managed by a custodian, who can be an individual or investment company.

Benefits of UTMA/UGMA Accounts

There are no contribution limits or custodian income limits for UTMA/UGMA accounts, which is a major advantage over other accounts for minors. Furthermore, withdrawals can be for any purpose (as long as they’re for the minor), not just for education. This is another advantage UTMA/UGMA accounts offer.

Taxation of UTMA/UGMA Accounts

The tax structure of UTMA/UGMA accounts is a little complicated, which is one of their weaknesses. Contributions are not taxed at all, but earnings generated in the account may be taxed.

The first $1,050 of income generated is tax free. The next $1,050 is taxed at the minor’s tax rate, and this is usually quite low. Any income above $2,100 is taxed at the parents’ tax rate or the minor’s tax rate, whichever is higher. If the minor has reached age 18 by this point, the income is automatically taxed at his rate, not the parents’ rate.

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How to Open a UTMA/UGMA Account at Firstrade

To open a custodial account at Firstrade, click on their promotion link: Get transfer fee rebate. Then click on the orange “Open an Account” button. You’ll need a copy of a government-issued ID for the custodian.

Reasons to Choose Firstrade

Custodial accounts at Firstrade can invest in several assets, including not just stocks, but also mutual funds, ETFs, closed-end funds, option contracts, and bonds. There are no account fees whatsoever.

Besides its policy on account fees, Firstrade was one of the first brokerage firms to adopt a $0 commission schedule. On top of stocks and ETFs, the broker offers $0 trades on options and mutual funds. It is one of the few brokerage firms to have zero commissions on these products.

Additionally, option trades have no per-contract charges. Some of the big brokerage firms in the industry charge per-contract fees and commissions on most mutual funds.

Firstrade also has a user-friendly mobile app and a trade bar on its website. The trade bar is the crown jewel in the broker’s suite of software. It can be used to easily submit orders for stocks, ETFs, and options.


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