Uniform Transfers to Minors Act (UTMA)

If you want to give an irrevocable gift to a minor, while reducing tax liability, a UTMA custodial account may be right for you.

You control the money in the account until the child reaches a majority age. There is no limit on how much you can contribute. Earnings and withdrawals are subject to taxation.

Principal UTMA account details:

Eligibility	Anyone can contribute Designated beneficiary must be a minor when the account is opened
Minimum to open account	$1,000 or $100 with $100 systematic purchases
Annual Contribution Limits	Generally no limit, but anything above $11,000 per beneficiary per donor subject to gift taxes
Deductibility of Contributions	None
Withdrawals	The custodian can withdraw funds as long as they will be used to benefit the child Once the child reaches a majority age (usually 18), he/she can use the funds for anything he/she chooses

What are the advantages of a UTMA account?

Wide choice of investment options
Easy to start
No earnings restrictions
Tax liability of money invested in a minor's name may be lower than the taxes due on the same money if it were a regular account (under an adult's name). Currently, annual earnings are taxed as follows:

Under 14 years of age	14 years or older
First $750 is tax free Next $750 taxed at child's rate Above $1500 taxed at the parents' rate	All income is taxed at child's rate

What are the disadvantages of a UTMA account?

Withdrawals are taxable
Child owns account at majority age (18 or 21) - can use the money for non-education expenses
May affect financial aid - considered a student asset
Earnings taxable in current year

Questions

If you have questions, please contact us at 1.800.222.5852.

Investment and insurance products are: not a deposit · not FDIC Insured ·
not insured by any federal government agency · not a bank guarantee · and may lose value.