About Custodial Accounts

Give a gift for the future

Learn more about how custodial accounts can help provide a simple solution to transfer and invest money for a child’s future.

A custodial account can be a simple route to a future goal. Custodial accounts let parents, grandparents, and others transfer and invest money for a minor. The accounts offer tax benefits and the flexibility to use funds for educational or non-educational expenses. 

What is a custodial account?

This simple way to transfer property to a minor is called a Uniform Transfer to Minors (UTMA) or Uniform Gift to Minors (UGMA) depending in which state the minor resides.

Eligibility restrictions 

None 

Contribution age limits 

Generally up to age of majority (18 – 21) for your state

Maximum yearly contribution per student

No limit. Up to $14,000 can be treated as a gift for gift-tax purposes

Minimum initial investment 

Varies by account from $0 to $100,000

Taxation of earnings and withdrawals

Earnings are taxable, typically at the minor’s tax rate

Qualified withdrawals 

Funds must be used for the benefit of the minor at any time

Penalties for non-qualified withdrawals 

Not applicable 

Ownership of assets (for financial aid)

Transfers from adult custodian to minor at age of majority

Commissions and fees 

Vary by account

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Compare your options side by side

Custodial accounts, known as Uniform Transfer to Minors (UTMA) or Uniform Gift to Minors (UGMA) are different from college savings accounts. Learn more from our comparison table.

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