While you can technically withdraw money from a custodial account before your child reaches the age of majority, you can only do so for the direct benefit of the child. That means any purchases must be to help your child, like buying new school clothes or braces.
When can you withdraw from an UTMA?
Under the Uniform Transfers to Minors Act (UMTA), money deposited into a UTMA account cannot be withdrawn for any reason—except by the child at the appropriate age. In the United States, a child’s money does not belong to the child’s parents or guardians.
How many custodians can be on an UTMA account?
Opening Custodial Account Whether more than one custodian can be listed on the account depends on state law and the policy of the individual bank. If two custodians are permitted, each will have authority to conduct transactions on the account, including withdrawals.
When can a parent cash out a UTMA or a UGMA?
Each state has adopted its own version of these accounts, but generally, beneficiaries can access their UGMA money at age 18 and UTMA cash at age 21. These accounts are popular ways to save for a child’s college costs. However, the parent or custodian does not have to use the money for education.
How old do you have to be to transfer UTMA funds?
Unused Funds. For classic UGMA accounts, this generally occurs at the age of 18. For the newer UTMA accounts, this age is usually 21—but may be as late as age 25. Unlike Section 529 plans and Coverdell ESA’s, there’s no ability to transfer the account to another child or change beneficiaries.
How much money can I put in my UTMA account without paying tax?
As of 2012, you could give the account $13,000 as an individual or $26,000 as a couple without having to pay a gift tax. Every UTMA account has a designated custodian who can make withdrawals or cash in the account at any time.
How old do you have to be to get UGMA money?
Each state has adopted its own version of these accounts, but generally, beneficiaries can access their UGMA money at age 18 and UTMA cash at age 21. These accounts are popular ways to save for a child’s college costs.
