The legend that adult squirrels castrate their young is in fact a "legend". When you harvest a squirrel that doesn't appear to have any testicles, it's a juvenile. Like most other mammals, it takes a while for them to drop. Adult squirrels retract their testicles into their abdominal cavity when it's not breeding season, giving them the appearence they have been castrated.
Kind of sad that the "legend" has to end within my family.