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UGMA/UTMAs at a glance.

Tax considerations
  • Contributions aren't tax-deductible, and earnings are subject to federal income or capital gains tax. Some of the potential tax advantages have been limited by rule changes in recent years that have increased the age limit for applying a child's tax rate to investment income.
Eligibility
  • Anyone can open or contribute on a child's behalf.
  • The child can contribute to his or her own account.
Contributions
  • The minimum initial investment for a Vanguard UGMA/UTMA is generally the same as that for regular accounts, which is $3,000 in most cases ($1,000 for Vanguard Target Retirement Funds). To view a full listing of available funds and their minimums, see our mutual fund list.
  • You can give up to $15,000 a year ($30,000 for a married couple filing jointly) without incurring federal gift tax.
Control
  • Upon reaching the age of majority (18–21, depending on the state), the beneficiary can use the assets for any purpose.
Withdrawals
  • There is no penalty if the account assets are not used for college.
Fees
  • The account service fee is $20 per year for each Vanguard fund having a balance under $10,000.
Investment options
  • You can choose from a wide selection of marketable securities and bank products.
  • Some states' UTMAs allow noncash gifts such as appreciated securities or real estate.
Financial aid impact
  • UGMA/UTMAs are considered the child's assets, so they may have a significant impact on financial aid. Financial aid calculations generally weigh a child's assets more heavily than assets of the parent or guardian.
Income restrictions
  • You can invest in an UGMA/UTMA account no matter what you earn.