FASTTRACK: Daily Prices | Account Access | Mutual Fund Performance | Contact Us
UGMA/UTMA
As you choose a gift for that special child, consider opening or contributing to a UGMA/UTMA Account. An UGMA* or UTMA* is a type of account that allows you to gift or transfer money to a minor and maintain control over the assets until the child reaches the age of majority (usually 18 or 21, depending on the state). Upon reaching the age of majority, the child has the right to take control of the account.
* States have adopted either the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act.
UGMA/UTMA Contribution Rules
- There are no contribution limits or deadlines for UGMA/UTMA accounts.
- All UGMA/UTMA contributions, gifts, and transfers are irrevocable and belong to the minor. Assets may not be transferred to anyone else.
- UGMA/UTMA accounts can be established using the UGMA/UTMA Application.
UGMA/UTMA Tax Rules
When you prepare your taxes, you may need to account for your child’s unearned income. This is commonly referred to as the “kiddie tax”. The kiddie tax rules apply if the child’s unearned income is more than $2,300. Among other things, unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions) and income received as the beneficiary of a trust.
| 2024 Kiddie Tax Rates on Unearned Income | |
| 0 – $1,300 | Not taxed |
| $1,300 – $2,500 | Taxed at child’s rate |
| $2,500+ | Taxed at parents’ rate |
| Children Subject to Kiddie Tax | |
| Under Age 18 | Kiddie tax applies |
| Age 18 | Kiddie tax applies unless the child had earned income that was more than half of his/her support |
| Full-time Students Ages 19-23 | |
For more information on how to report unearned income, please refer to:
- IRS Form 8814 (Parents’ Election to Report Child’s Interest and Dividends)
- IRS Form 8615 (Tax for Certain Children Who Have Unearned Income)
UGMA/UTMA Distributions
UGMA/UTMA distributions are to be made for the benefit of the child (e.g. tuition, computer, etc.).
UGMA/UTMA Custodial Fee
There is no annual custodial fee for an UGMA/UTMA account.
Tax Forms
Dividend income and capital gain distributions are reported on IRS Form 1099-DIV (“Dividends and Distributions”) which is mailed to you in early February.
Redemptions are reported on IRS Form 1099-B (“Proceeds from Transactions”) which is mailed to you in early February.