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I just got off the phone with a Schwab customer service representative who mentioned to me that she heard of a new "Custodial IRA". She did not know much about it since she just heard that the literature is available to order this week. I'm posting my question here to see if anyone has heard of this. If so, what's it about?

From what the representative was telling me, it sounds like an IRA for kids that can be funded by a custodian. Sounds too good to be true; but if it's true, I'm all ears!

Sorry, this is simply a case where you were talking to a confused customer service rep. IRAs in general can be maintained by trustees or custodians. All the same rules apply to an IRA regardless of whether it has a trustee or custodian. I think the distinction is there mainly to overcome an issue under some state laws as to what types of financial institutions can serve as trustees.

A custodial IRA is not to be confused with a custodial account for minors -- a completely different animal which is not an IRA and which is established under the uniform gifts (or transfers) to minors act.

Kaye Thomas, author
Fairmark Press Tax Guide for Investors
http://www.fairmark.com
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