Compare College Savings Plans > Custodial Accounts (UGMA/UTMA)

Invest on behalf of a minor for any future expense

A custodial account, also known as Uniform Gifts to Minors Act/Uniform Transfers to Minors Act (UGMA/UTMA), gives you the flexibility to set aside money to pay for education or any expense that benefits a child. All funds in the account are considered a permanent gift that becomes the child’s assets once they reach vesting age.
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  • Ability to use funds for any beneficiary expense
  • Enjoying the flexibility of a cash management account
  • Accessing a full range of investment choices
  • Making contributions up to annual gift tax limits2
 
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Simplify investing for a child's future

With access to a full range of investments, simple flat-rate pricing and one-on-one guidance when you need it, Merrill Edge® can help you invest for a child's future. Plus, we offer a streamlined investing experience that combines the investing insights of Merrill Lynch with the convenience of Bank of America banking.
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Why a custodial account may be right for you

The Uniform Gift to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) are custodial accounts that allow you to invest in a college education or any other expense that benefits a child. Funds in the account are considered an irrevocable gift that becomes a child's assets once they reach vesting age.
 
What are the benefits of a custodial account?
  • Funds can be used for any purpose as long as it benefits a child (no penalty if the assets aren't used for college)
  • You can pass money to a child once they reach the vesting age
  • Can be funded with cash or securities
  • Anyone can contribute on behalf of a child
What are the tax advantages of a custodial account?

In 2018, the first $1,050 of a child's income generally is tax-exempt, the next $1,050 of unearned income generally is taxed at the child's tax rate, and unearned income over $2,100 generally is taxed at the parent's tax rate if the child is under age 19 (or is a full-time student under age 24) at the end of the year.

What are the investment choices for a custodial account?

Access a full range of investments choices, including: stocks, exchange-traded funds (ETFs), bonds and thousands of well-known mutual funds.

Who controls a custodial account?

The account is owned by a custodian until the child inherits the assets upon vesting age. Beneficiaries cannot be changed because contributions into the account are considered an irrevocable gift.

How much can I contribute to a custodial account?

There's no limit to the amount you can contribute. And there's no age limit for making contributions and withdrawals, but account ownership will be transferred to the minor upon vesting age. You can contribute up to the annual gifting limits of $15,000 (or $30,000 for couples) annually gift tax-free.

Can anyone else contribute to a custodial account?

Anyone can contribute to a custodial account, including family members and friends.

How will this account type impact financial aid?

Custodial accounts are treated as a child's asset and can reduce their ability to get financial aid. The impact is less favorable than that of assets held in a Section 529 or Coverdell Education Savings Account.

 
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Three steps to get started with your Merrill Edge custodial account

1

Open your account

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2

Fund your account

Fund your account instantly in real time from your eligible linked Bank of America bank account. Or, transfer funds to your account by check, by wire transfer, or by transferring or rolling over an existing account.4
Learn how to fund your account.

 
3

Start investing

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Tab Four

Simple flat-rate pricing

Everyday low pricing
Pay one flat rate for stocks and ETF trades with a custodial account—regardless of your account balance or how often you trade. Other fees may apply.Footnote1
$6.95
$0 trades—up to 100 per monthFootnote2
Learn how to qualify for up to 100 $0 online stock and ETF trades per month with Preferred Rewards. Other fees may apply.Footnote1
$0
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Brokerage account fees

Annual account fee
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$0
Additional transaction, service and investment fees.
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BofA Merrill Lynch Global Research is equity research produced by Merrill Lynch, Pierce, Fenner & Smith incorporated and/or one or more of its non-U.S. affiliates.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Footnote 1 Other fees may apply. Sales are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. There are costs associated with owning ETFs. To learn more about Merrill Edge pricing, visit merrilledge.com/pricing.

Footnote 2 For 2018, contributions can be made up to the federal gift-tax exclusion limit of $15,000 per beneficiary per year ($30,000 for married couples) without incurring federal gift taxes or generation-skipping transfer tax. You can take advantage of a forward gifting provision that allows you to contribute up to $75,000 ($150,000 for married couples filing jointly) per beneficiary in a single year without incurring gift tax. Contributions between $15,000 and $75,000 ($30,000 and $150,000 for married couples filing jointly) made in one year can be prorated over a five-year period without subjecting you to gift tax or reducing your federal unified estate and gift tax credit. If you contribute less than the $75,000 ($150,000 for married couples filing jointly) maximum, additional contributions can be made without you being subject to federal gift tax, up to a prorated level of $15,000 ($30,000 for married couples filing jointly) per year. Gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given beneficiary in the year of contribution. For contributions between $15,000 and $75,000 ($30,000 and $150,000 for married couples filing jointly) made in one year, if the account owner dies before the end of the five-year period, a prorated portion of the contribution may be included in his or her estate for estate tax purposes. Please consult your tax and/or legal advisor for such guidance.

Footnote 3 Merrill Edge Roadmap® participation requires a Merrill Edge Advisory Center™ account.

Footnote 4 You have choices for what to do with your employer sponsored retirement plan. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth, roll over to an employer sponsored plan from a prior employer to an employer sponsored plan at your new employer, take a distribution or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care. Visit http://www.merrilledge.com/retirement/rollover-ira or call a Merrill Edge rollover specialist at 1.888.637.3343 for additional information about your choices.

Footnote 
Eligibility: Commissions are only waived for online stock and ETF trades conducted via an individual or jointly owned self-directed personal CMA® or IRA account.

Merrill Edge waives its commission fee for:
  • 10 monthly online stock & ETF trades for Gold tier members
  • 30 monthly online stock & ETF trades for Platinum tier members
  • 100 monthly online stock & ETF trades for Platinum Honors tier members & Bank of America Private Bank clients
For details about commissions, transaction fees and any other fees that may apply, visit merrilledge.com/pricing. For full details about ways to qualify for $0 trades, call 888.637.3343 or visit merrilledge.com/$0detail. Preferred Rewards for Wealth Management clients (formerly known as Banking Rewards for Wealth Management), other than Bank of America Private Bank clients, do not receive Merrill Edge® Self-Directed commissions waivers.
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