Custodial Accounts with Vanguard
If you're looking for a way to save money for a minor, whether for education or other future needs, Vanguard offers an account that may fit what you need.
Opening a Vanguard Custodial Account
To begin the application process, go to Vanguard.com and look for the option to open a new account. Vanguard has a dedicated page for its UGMA/UTMA account, and if you already have a custodial account at another firm, you may be able to transfer it to Vanguard. Otherwise, you can start a brand-new custodial account online.
If you're opening a new account, you'll need to choose how you want to fund it. Vanguard allows several funding methods, including an electronic transfer from an outside bank account or a transfer from another Vanguard account. You may also move an existing custodial account from another brokerage firm into Vanguard, although that process is different from simply depositing cash.
As part of the process, you'll need to choose the type of account you want to open. To open a custodial account, select the UGMA/UTMA option for a minor.
Once you've made this selection, Vanguard will open the appropriate account type under state law. The exact form of the account, whether UGMA or UTMA, depends on the rules in your state.
Legal Structure of the UGMA/UTMA Account
Contributions made to a UGMA or UTMA account are not tax-deductible, and the earnings may be taxed under the child’s rules up to certain limits. In some cases, a portion of the income may be taxed at 0%, while higher amounts can be taxed at other rates under the kiddie-tax rules.
One drawback of UGMA/UTMA accounts is that once the beneficiary reaches the age of majority under state law, the people who set up the account, usually parents or grandparents, no longer control it. This is not true for every account designed for minors.
Custodial Account Fees at Vanguard
Vanguard charges a
$25 annual fee on brokerage UGMA and UTMA accounts. If the custodial account is a legacy mutual fund-only account, the fee can apply to each Vanguard mutual fund in the account. However, this charge can be avoided by signing up for electronic delivery of account documents on eligible brokerage accounts.
Better Custodial Account
Charles Schwab, one of the market's largest and highest-rated brokerage firms, offers a strong custodial account.
They have $0 commission on listed stocks and ETFs, plus over
4,000 no-load, no-transaction-fee mutual funds. There are no account-opening or maintenance fees.
Charles Schwab also has more advanced trading and research tools.
Learn more...
Free Charles Schwab Account
Open Schwab Account
Other Accounts at Vanguard for Minors
If the UGMA/UTMA account doesn’t appeal to you, Vanguard does offer a 529 plan, which could be a useful alternative, especially if you’re saving for education. While assets in a UGMA/UTMA account can be used for any purpose, assets in a 529 plan are generally meant for qualified education expenses. Vanguard’s 529 can be used for college, trade school, vocational school, and even K-12 expenses. And with a 529, the account owner keeps control of the account.
Like a custodial account, contributions to a 529 plan aren’t deductible at the federal level, although they may be deductible at the state level depending on where you live. Earnings grow on a tax-advantaged basis, and qualified withdrawals receive federal tax-free treatment.
Updated on 4/13/2026.
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