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Education & Uniform Transfers to Minors Accounts (UTMA/UGMA)

It is never too early to start saving on behalf of a child for future expenses. You can save for educational or other anticipated costs by using an Uniform Transfer to Minors Account (UTMA), also known as Uniform Gifts to Minors Act (UGMA). UTMA accounts are custodial accounts where an adult acts on behalf of the minor child. Anyone can contribute to the account and the contributions are unlimited. The custodian makes transactions in the account until the minor becomes of age. These accounts are a great way to save now for educational expenses, specialty camps, college, housing, a car, and other costs beyond education in a child’s future.

Education & Uniform Transfers to Minors Accounts (UTMA/UGMA)

It is never too early to start saving on behalf of a child for future expenses. You can save for educational or other anticipated costs by using an Uniform Transfer to Minors Account (UTMA), also known as Uniform Gifts to Minors Act (UGMA). UTMA accounts are custodial accounts where an adult acts on behalf of the minor child. Anyone can contribute to the account and the contributions are unlimited. The custodian makes transactions in the account until the minor becomes of age. These accounts are a great way to save now for educational expenses, specialty camps, college, housing, a car, and other costs beyond education in a child’s future.


Advantages of a UTMA/UGMA Account

  • Contributions are unlimited and may be gift tax free if they fall under the annual gift limit per person.
  • Anyone can hold an account on behalf of a child.
  • Anyone can contribute to the account. There is no restriction based on relationship.
  • There are no penalties if the funds are not used for college. Funds can be used for any purpose.
  • Control of the investments. You can decide what investments are appropriate. You aren’t restricted to an exclusive menu of options.

UTMA accounts incur income taxes at the usually lower rate for the child, up to a specified limit. This allows for savings to accrue for any future need for a child.

More on UTMA/UGMA accounts
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