Investing for Minors at Thinkorswim
When looking for a broker for minors, you should consider account options that are sensible, low fees, a good range of investment tools, and educational materials to help young investors navigate the financial markets.
Read on to find out if Thinkorswim's pernt company, Charles Schwab, minor accounts meet your needs.
Thinkorswim Age Requirement
To open a Charles Schwab brokerage account in the United States independently, you must be 18 or older. Before 18, you can still open an account, but you’ll need assistance from a guardian.
What types of accounts for minors does Charles Schwab offer?
Charles Schwab provides various accounts for minors, including Custodial Accounts, 529 College Savings Plans, Education Savings Accounts, and Custodial IRAs.
What are the contribution limits for these accounts?
There are no contribution limits for Custodial Accounts and Custodial IRAs. Contribution limits for 529 College Savings Plans and Education Savings Accounts can vary based on state and federal laws.
What is the cost of investing for kids at Schwab?
Charles Schwab generally charges very few fees for minor accounts. There are no commissions for listed stocks and ETFs, and no fees for opening or maintaining an account. Some small fees may apply from regulators and specific securities.
What educational opportunities are provided?
Charles Schwab offers a wide range of educational materials to help custodians and minors learn about investing and financial management. The 'learn' section covers nearly every aspect of personal finance.
Free Charles Schwab Account
Open Schwab Account
Accounts for Minors at Schwab
Charles Schwab offers a comprehensive range of accounts tailored for minors, each designed to meet specific needs.
Whether you want to teach a child about finances, save for their future, save for college, or help them start saving for retirement, Schwab likely has a suitable option. It's important to understand the details of each account type to make the best decision.
Here are the available accounts for minors:
Custodial Account
A custodial account is one of the simplest ways to open an account for a minor.
A custodial account is an investment account set up in a minor's name, managed by an adult until the child turns 18 (or 21 in some states). The account and all the money deposited into it are considered irrevocable gifts and must be used for the child's benefit.
- No contribution limits.
- The first $2,600 of a dependent child's unearned income is tax-free.
- Contributions up to $18,000 per beneficiary per year do not incur gift tax.
- The custodian manages the securities and saves for the minor's future.
- All assets are in the kid's name, affecting financial aid applications.
- Funds must benefit the minor before they reach adulthood.
- No minimum deposit, account, or maintenance fees, and no commissions for online stock and ETF trades. Other fees may apply.
529 College Savings Plan
For those looking to save specifically for college, the Schwab 529 College Savings Plan is available. 529 accounts are state-sponsored savings plans managed by American Investment Management, Inc. These accounts use funds from leading firms like JP Morgan, Vanguard, and Baird to help you keep pace with the market.
- No contribution limits.
- The first $2,600 of a dependent child's unearned income is tax-free.
- As of 2023, contributions up to $17,000 per beneficiary per year do not incur gift tax.
- The custodian can adjust the portfolio twice a year.
- All assets are in the kid's name, affecting financial aid applications (up to 20%).
Education Savings Account
Coverdell accounts, known as Education Savings Accounts (ESAs) at Schwab, are often opened alongside 529 accounts. The main advantage of an ESA is tax-free withdrawals for eligible education expenses.
At Charles Schwab, there are no fees for opening or maintaining an ESA, and the minimum to open an account is $0. Online trades of listed equities and Schwab ETFs are commission-free. Other account fees, fund expenses, and brokerage commissions may apply.
Custodial IRA
Similar to the custodial account, the Custodial IRA at Charles Schwab allows for tax-advantaged account growth for minors. This account lets custodians manage investments on behalf of the minor until they take over the account at 18 (or 21 in some states).
The benefits of custodial IRAs are similar to other retirement accounts, with tax advantages that are better than a standard brokerage account. They are also useful for teaching minors the value of long-term saving.
- No contribution limits.
- The first $2,600 of a dependent child's unearned income is tax-free.
- Contributions up to $17,000 per beneficiary per year do not incur gift tax (2023).
- Funds must be used for the minor's benefit before they reach adulthood.
- No minimum deposit, account fees, and no commissions for online stock and ETF trades, though other fees may apply.
Open Charles Schwab Account
Open Schwab Account
Updated on 6/19/2024.
|