Custodial Account

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DEFINITION of 'Custodial Account'

1. An account created at a bank, brokerage firm or mutual fund company that is managed by an adult for a minor that is under the age of 18 to 21 (depending on state legislation).

2. A retirement account managed for eligible employees by a custodian.

BREAKING DOWN 'Custodial Account'

1. In a custodial account, approval from the custodian is required in order for a minor to transact securities. The custodian of these types of accounts is usually a parent or guardian of the minor.

2. The investments managed within a custodial account are limited to mutual funds and other similar products offered by regulated investment companies.

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