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.

Investopedia Says:
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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Account that is created for a minor, usually at a bank, brokerage firm, or mutual fund. Minors cannot make securities transactions without the approval of the custodian, who manages cash and other property gifted to minors under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA). Any earnings or interest from the account up to $800 are tax-free if the child is under age 14. Earnings from $800 to $1,600 are taxed at the child's tax rate. Any earnings over $1,600 are taxed at the parents' rate. Once the child turns 14, the earnings are taxed at the child's tax rate. When the child reaches the age of majority, usually 18, they have full discretion over the account, unless the account is set up in a trust controlled by the parent. See also Clifford Trust; Crown Loan; Kiddie Tax; Uniform Gifts to Minors Act.