As a fee-only financial planner who has helped hundreds of families open custodial Roth IRAs for their children, the question I hear most often is not “which account is best” — it’s “which account is cheapest.” That’s the right instinct. When you’re opening a Roth IRA for a teenager who earned $4,000 from a summer job, even small differences in fees can compound dramatically over the 50+ year investment horizon ahead of them.
The good news: the major brokerages have raced to the bottom on fees, and genuinely low-cost custodial Roth IRA accounts for minors are widely available. Here’s how to choose between them.
Quick Answer: Best Low-Cost Custodial Roth IRA for Minors
- Best overall (lowest cost + easiest): Fidelity — $0 minimum, $0 fees, ZERO expense ratio index funds
- Best for index fund investors: Schwab — $0 minimum, excellent ETF selection, SCHB/SCHX at 0.03% expense ratio
- Best for Bogleheads: Vanguard — $0 minimum for custodial Roth IRA, legendary low-cost index funds
What Makes a Custodial Roth IRA “Low Cost”?
When evaluating the true cost of a custodial Roth IRA for a minor, there are three layers of fees to consider:
- Account maintenance fees — Annual fees charged just for having the account open. These are the most important fees to eliminate, and all three major brokerages now charge $0.
- Trading commissions — Per-trade fees when buying or selling. Again, $0 at all major brokerages for stocks and ETFs.
- Fund expense ratios — The annual percentage charged by the mutual fund or ETF itself. This is where the real difference lies and where long-term costs are made or broken.
For a custodial Roth IRA that will compound for 50 years, a 0.5% difference in expense ratio on $7,000 per year of contributions compounds to a difference of over $150,000 by retirement age. Expense ratios matter enormously — and the cheapest options are now extremely cheap.
Fidelity Custodial Roth IRA: The Best Low-Cost Option for Most Families
Fidelity wins on cost grounds for most families, primarily because of its proprietary ZERO expense ratio index funds — the only mutual funds in existence that charge literally 0% annually.
| Fee Category | Fidelity Cost |
|---|---|
| Account opening minimum | $0 |
| Annual maintenance fee | $0 |
| Stock/ETF trading commissions | $0 |
| FZROX (Total Market Index) expense ratio | 0.00% |
| FZILX (International Index) expense ratio | 0.00% |
| Minimum for Fidelity ZERO funds | $1 (fractional shares) |
My recommendation for most families: Open the custodial Roth IRA at Fidelity and invest contributions in FZROX (Fidelity ZERO Total Market Index Fund). It covers the entire U.S. stock market, charges nothing in annual expenses, requires no minimum investment, and is available in fractional shares — so you can invest every dollar of the contribution immediately rather than waiting to accumulate a minimum.
The main limitation to know: Fidelity’s ZERO funds are proprietary and non-transferable. If you ever move the account to another brokerage, you’ll need to sell FZROX and repurchase a similar fund at the new provider. This is not a tax event inside a Roth IRA, but it’s worth knowing.
Schwab Custodial Roth IRA: Excellent Low-Cost Alternative
| Fee Category | Schwab Cost |
|---|---|
| Account opening minimum | $0 |
| Annual maintenance fee | $0 |
| Stock/ETF trading commissions | $0 |
| SCHB (U.S. Broad Market ETF) expense ratio | 0.03% |
| SCHX (Large Cap ETF) expense ratio | 0.03% |
| Schwab S&P 500 Index Fund (SWPPX) | 0.02% |
| Minimum for SWPPX | $1 (via Schwab Fractional Shares) |
Schwab’s expense ratios are marginally higher than Fidelity’s ZERO funds (0.02–0.03% vs. 0%), but the difference on a $7,000 contribution is approximately $1.40–$2.10 per year. That is genuinely immaterial. Schwab’s advantage is that its ETFs (SCHB, SCHX) are fully portable — if you move the account, you can transfer the shares in-kind without selling.
Schwab is also strong for families who want the child to learn investing, because its platform is one of the cleaner and more educational for young investors.
Vanguard Custodial Roth IRA: The Boglehead’s Choice
| Fee Category | Vanguard Cost |
|---|---|
| Account opening minimum | $0 |
| Annual maintenance fee | $0 (with e-statements) |
| Stock/ETF trading commissions | $0 |
| VTI (Total Stock Market ETF) expense ratio | 0.03% |
| VTSAX (Total Stock Market Mutual Fund) | 0.04% |
| Minimum for VTSAX | $3,000 |
| Minimum for VTI (ETF) | ~$1 (via fractional shares) |
Vanguard is where the low-cost index fund revolution started, and its products remain among the best. VTI at 0.03% is effectively as cheap as Schwab’s equivalents. The one practical consideration for custodial Roth IRAs: Vanguard’s interface is older and less intuitive than Fidelity’s or Schwab’s, which can matter when you’re trying to teach a teenager about investing.
Vanguard also has an important platform consideration: Vanguard transferred its mutual fund accounts to Vanguard Brokerage Services in 2022-2023. New custodial Roth IRA accounts are opened as brokerage accounts, with VTI (the ETF equivalent of VTSAX) being the more accessible fund for smaller balances.
Side-by-Side Comparison: True Cost on a $7,000 Annual Contribution
| Brokerage | Recommended Fund | Expense Ratio | Annual Cost on $7,000 | Account Fee |
|---|---|---|---|---|
| Fidelity | FZROX | 0.00% | $0.00 | $0 |
| Schwab | SWPPX / SCHB | 0.02–0.03% | $1.40–$2.10 | $0 |
| Vanguard | VTI / VTSAX | 0.03–0.04% | $2.10–$2.80 | $0 |
The cost differences between these three providers are extraordinarily small. On a $7,000 annual contribution, Schwab costs approximately $2 more per year than Fidelity, and Vanguard costs approximately $3 more. Over 40 years of compounding, these differences remain minor compared to the return differential that asset allocation, contribution consistency, and staying invested will produce.
The bottom line on cost: All three are genuinely low-cost. Your choice should be based on user experience, fund portability preferences, and which platform you’ll actually use consistently.
Contribution Rules for Minor Custodial Roth IRAs
Before opening any of these accounts, confirm you meet the key eligibility rules:
- Earned income requirement — The child must have earned income (wages, self-employment income) to contribute. The contribution cannot exceed the child’s earned income for the year, up to the annual limit ($7,000 for 2025).
- The parent can fund the contribution — The parent can deposit the money; the child just needs to have earned that amount. If your child earned $3,000 from a summer job, you can contribute up to $3,000 to their Roth IRA, even if they spent their actual paychecks.
- No age minimum — A child of any age can have a custodial Roth IRA as long as they have earned income. A 10-year-old with a legitimate modeling job or acting income qualifies.
- Custodian control — The parent (or other adult) acts as custodian until the child reaches the age of majority (typically 18–21 depending on state).
What Happens to a Custodial Roth IRA When the Child Turns 18?
When the child reaches the age of majority (18 in most states, 21 in a few), the custodian’s role ends and the account transfers fully to the child’s control. At Fidelity and Schwab, this typically requires paperwork to re-title the account from a custodial Roth IRA to a regular Roth IRA in the child’s name. The assets remain — only the account structure changes.
At Vanguard specifically: Vanguard sends a notice to the account owner when the minor reaches majority, and the account is then re-titled to the adult’s sole ownership. The investments do not need to be liquidated; they transfer as-is.
Bottom Line: Which Low-Cost Custodial Roth IRA Should You Open?
For the vast majority of families:
- Open at Fidelity if cost minimisation is your absolute priority and portability is not a concern
- Open at Schwab if you want the lowest-cost portable ETFs and a strong educational platform for the child
- Open at Vanguard if you’re already a Vanguard investor and value account consolidation
If you want to learn more about the mechanics of custodial accounts and long-term investing strategies for minors, The Little Book of Common Sense Investing by John Bogle remains the single best introduction to the low-cost index fund philosophy that underpins all three of these approaches.
The Philosophy Book That Finally Made Me Stop Second-Guessing My Kid’s Investment Choices
When you’re opening a custodial Roth IRA for a minor, you’re not just choosing a brokerage—you’re committing to a 50+ year strategy that will test your patience during every market correction. Most parents I work with sabotage their own kids’ accounts by panic-selling during downturns, and it usually comes down to one thing: they don’t have a clear investment philosophy to fall back on when fear kicks in.
What works
- Bogle’s case for index funds directly supports the low-cost custodial strategy—when your kid’s account is already at a zero-fee broker, this book explains *why* that decision compounds so powerfully over decades.
- It gives you a confidence anchor during volatile markets; I’ve referenced specific chapters with parents who were tempted to move their teenager’s money to “safer” investments, and it’s shifted their behavior every time.
- The writing is accessible enough that older teens can read it themselves, which turns the custodial account into a teaching moment rather than a black box they’ll inherit.
What doesn’t
- It won’t give you specific tactical advice on whether Fidelity or Schwab’s custodial Roth is “better”—it’s a philosophy book, not a product comparison guide.
- If you’re looking for ways to beat the market or outsmart the system, this book will disappoint you (intentionally), which is exactly why you need to read it before opening that account.
I almost didn’t include this book in my recommendations because it felt too foundational—too obvious—until I realized that the parents making the worst custodial Roth decisions were the ones who had picked a low-cost broker but had no philosophy to defend it. The Little Book of Common Sense Investing by John Bogle fills that gap in about three hours of reading.
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