UTMA / UGMA Custodial Accounts
Accounts a custodian manages for a minor, who owns the assets outright.
What is UTMA / UGMA Custodial Accounts?
Gifts to the account are irrevocable and belong to the minor, whose Social Security number is on the account. One custodian and one minor per account. The custodian is a fiduciary: no margin, no speculative trading, and no use of the assets for the custodian's benefit. Control passes to the child at the state's age of majority. Unearned income above a threshold is taxed at the parents' rate (the kiddie tax).
UTMA / UGMA Custodial Accounts: a worked example
A parent cannot take back UTMA money to pay the family's mortgage - it belongs to the child.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
All Retirement Plans, Accounts & Trading terms · Full glossary