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UTMA and 529 Plans

Gifting to Children: UTMA and 529 Plans

UTMA Account

A UTMA account is a custodial account created in a minor’s name, but administered by a custodian until the minor reaches the age of majority. Once the minor reaches age 18 (unless receipt of the account is delayed to age 25), control of the account passes to them completely, so they are free to use the money however they choose.

529 Plan

A 529 account, on the other hand, is used only for higher education, and is owned and administered by the person who created it; the minor is the beneficiary. This means that control of the funds does not pass to the minor it was created for, even after they have become a legal adult.

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