Robinhood does not offer custodial accounts

Robinhood does not provide custodial accounts — accounts that a parent or guardian opens and controls on behalf of a minor. If you are looking to invest money for a child under 18, Robinhood is not the platform to use.

A custodial account is a legal structure where an adult (the custodian) holds and manages investments for a minor (the beneficiary) until the child reaches the age of majority, usually 18 or 21 depending on your state. The custodian makes all investment decisions, handles all transactions, and reports the account to the IRS. Robinhood's account structure does not support this arrangement.

This matters because custodial accounts have tax advantages and legal protections that regular accounts do not. If you want to invest for a minor, you will need to look at other brokers or investment platforms that specifically offer custodial accounts.

Key Takeaways

  • Robinhood does not offer custodial accounts, so you cannot open an account in a child's name with yourself as the custodian.
  • A custodial account is a legal structure where a parent or guardian controls investments for a minor until they reach adulthood.
  • Custodial accounts have tax benefits (like the Kiddie Tax rules) and legal protections that regular accounts do not have.
  • Other brokers such as Fidelity, Charles Schwab, and Vanguard do offer custodial accounts if you want to invest for a minor.

What a custodial account actually does

A custodial account is opened in the child's name, but the parent or guardian controls it completely. You decide what to buy and sell, when to trade, and how much to deposit. The child does not have access to the account or the ability to make trades — that is the whole point.

When the child reaches the age of majority (18 in most states, 21 in a few), the account transfers to them automatically. They then own it outright and can do whatever they want with it. This is different from a regular savings account or investment account that a parent might open in their own name — those accounts belong to the parent, not the child.

Custodial accounts come in two legal forms: UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act). UTMA accounts are slightly broader and are available in most states. The differences matter for tax purposes and for what types of assets you can hold, but both serve the same basic function: letting you invest money for a child with legal protections and tax advantages.

Why custodial accounts have tax advantages

The main tax benefit is called the Kiddie Tax. For 2024, a minor can earn up to a certain amount of investment income (the exact amount changes each year) without paying federal income tax on it. Above that threshold, the income is taxed at the child's rate, not the parent's rate — which is usually much lower.

This means if you invest $5,000 in a custodial account and it earns $200 in dividends, that $200 may not be taxed at all, or may be taxed at the child's rate rather than yours. If you held the same investment in your own name, you would owe tax on that $200 at your own (likely higher) rate.

The tax advantage only works if the account is in the child's name with the child as the owner. A regular account in the parent's name does not get this benefit. This is one reason custodial accounts exist — they are a way to shift investment income to a lower tax bracket.

Brokers that do offer custodial accounts

If you want to invest for a minor, several major brokers offer custodial accounts. Fidelity, Charles Schwab, E*TRADE, and Vanguard all have custodial account options. Each has different minimum deposit requirements, fee structures, and investment choices, so it is worth comparing them.

Most custodial accounts at these brokers let you invest in stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Some allow individual stock picking; others focus on funds. A few offer fractional shares, which means you can invest smaller dollar amounts. Check the specific broker's website for details on what investments are available and what the account costs.

Many of these brokers also offer educational resources about investing for minors, including information about the Kiddie Tax and how custodial accounts work. If you are new to investing, reading those resources before opening an account can help you make a better decision about where to put your money.

What happens when the child turns 18

When the child reaches the age of majority (18 in most states), the custodial account automatically becomes their account. They gain full control and can access the money, make trades, or withdraw it entirely. As the custodian, you no longer have any authority over the account.

This is an important point: you cannot keep control of the money after the child turns 18. The law requires the transfer of control. If you want to continue managing money for an adult child, you would need a different legal structure, such as a power of attorney or a trust — but those are separate from custodial accounts.

Some parents use the age of majority as a teaching moment, sitting down with their child to review the account, explain how it grew, and discuss investment decisions going forward. Others straightforward hand over the login information and let the child take it from there. Either way, the account is theirs to manage.

Other ways to invest for a minor if you do not want a custodial account

If you do not want to open a custodial account, you have other options. You can open a regular investment account in your own name and earmark the money for your child — but you will pay taxes on the earnings at your own rate, and the money legally belongs to you, not the child.

You can also open a 529 college savings plan, which is specifically designed for education expenses. 529 plans have their own tax advantages and are offered by most states. The money must be used for education (tuition, room and board, books, and some other costs), but if it is, the growth is tax-free. If the money is not used for education, you will owe taxes and a penalty on the earnings.

Another option is a Roth IRA for a minor who has earned income (from a job or self-employment). A Roth IRA lets the child invest money they have earned, and the growth is tax-free as long as the money stays in the account until they are 59½. This is a more advanced option and requires the child to have actual income, but it can be powerful for teenagers who work.

Why Robinhood does not offer custodial accounts

Robinhood is designed for individual adult investors who want to trade stocks, options, and cryptocurrencies with low or no commissions. The platform focuses on ease of use and low barriers to entry for adults, not on the legal and tax complexity of managing accounts for minors.

Offering custodial accounts would require Robinhood to handle additional compliance, tax reporting, and legal requirements. Larger, more established brokers like Fidelity and Charles Schwab have the infrastructure and informed to manage these accounts at scale. Robinhood has chosen not to build that capability.

This does not mean Robinhood is a bad platform — it just means it is not the right tool for this particular job. If you want to invest for a minor, you will need to use a broker that offers custodial accounts.

Frequently Asked Questions

Can I open a regular Robinhood account for my child?

No. Robinhood requires account holders to be at least 18 years old. You cannot open an account in a child's name, and you cannot open an account in your own name and let your child use it — that would violate Robinhood's terms of service.

What if I just invest money in my own Robinhood account and plan to give it to my child later?

That is legally possible, but it has drawbacks. The money belongs to you, not your child, so you pay taxes on the earnings at your own rate. You also lose the legal protections and tax advantages of a custodial account. If you want to invest for a child, a custodial account at another broker is a better approach.

Is there a minimum age to open a custodial account?

No. You can open a custodial account for a newborn. There is no age requirement for the beneficiary. The account exists until the child reaches the age of majority, at which point it transfers to them automatically.

Do all states allow custodial accounts?

Yes. All 50 states allow custodial accounts under either the UGMA or UTMA law. The specific rules vary slightly by state, but the basic structure is the same everywhere. When you open a custodial account, you will choose which state's law governs it — usually the state where you live.

Can I change my mind and take the money out of a custodial account?

No. Once money is in a custodial account, it belongs to the child, not to you. You cannot withdraw it for your own use. You can only use the money for the child's benefit — things like education, medical care, or living expenses. Taking money out for yourself is illegal and can result in serious consequences.