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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:

  • 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 $14,000 per beneficiary per donor subject to gift taxes
Deductibility of Contributions
  • None
  • The custodian can withdraw funds as long as they will be used to benefit the child
  • Once the child reaches a majority age (18 or 21), 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 19 years of age* Children 19 years and older
  • First $1050 is tax free
  • Next $1050 taxed at child's rate
  • Above $2100 taxed at the parents' rate
  • All income is taxed at child's rate

* and children aged 19 through 23 who are full-time students and whose earned income does not exceed half of the annual expenses for their support.

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


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.

Have a question? Call us at 1.800.986.3343

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