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Custodial Accounts

Q: 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 .

Q: Who controls a custodial account?

The account is owned by a custodian until the child inherits the assets upon age of termination. The custodian has the responsibility to transfer the assets to the minor upon the attainment of the age of termination. Beneficiaries cannot be changed because contributions into the account are considered an irrevocable gift.

Q: 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 age of termination. You can contribute up to the annual gifting limits of $16,000 (or $32,000 for couples) annually gift taxfree.

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A custodial account allows you to invest on behalf of a minor for a college education or any other expense that benefits them.

Custodial Account Features

Choose how you want your account managed

Make contributions up to annual gift tax limits

Enjoy the flexibility of a cash management account

Manage the account until the minor is of age

Question:

Who can contribute to a custodial account?

Answer:

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

How much you may need to save for college expenses?

Find out how much you may need to save for college with our College Planning Calculator and prepare for the cost of higher education.

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Find your preferred way to invest, whether you're interested in simple stock trades, mutual funds, ETFs or fixed income and bonds.

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Frequently Asked Questions

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Custodial Accounts FAQs

What are some key features of a custodial account?

Funds in a custodial account can be used for any purpose as long as it benefits the minor (including college expenses)
Can be funded with cash or securities
Anyone can contribute on behalf of the minor
UGMA/UTMA accounts have unique features and requirements that are important to keep in mind. Of particular importance is the custodian's obligation to use the assets only for the benefit of the minor and to turn the assets over to the minor when they reach the termination age

How does investing in a UGMA/UTMA custodial account impact financial aid?

Assets in a UGMA/UTMA custodial account are treated as an asset of the beneficiary, which is weighted at 20% towards the Expected Family Contribution formula. This is based on current interpretation of federal financial aid rules. Financial aid rules may change, and the rules in effect at the time the beneficiary applies may be different. For more complete information, please go to the Department of Education's website at Go to third-party website www.ed.gov popup.

What are the tax advantages of a custodial account?

In 2022, the first $1,150 of a child's income generally is tax-exempt, the next $1,150 of unearned income generally is taxed at the child's tax rate, and unearned income over $2,300 generally is taxed at the parent's tax rate if the child is under 18, or the child is age 18 and does not have earned income that is more than half of his or her financial support, or is a full-time student who is at least age 19 and under age 24 and who does not have earned income that is more than half of his or her financial support if at least one parent is living at the end of the tax year and the child is not filing a joint return for the tax year.

What are the investment choices for a custodial account?

Who controls a custodial account?

How much can I contribute to a custodial account?

Can anyone else contribute to a custodial account?

Footnote

Certain banking and brokerage accounts may be ineligible for real-time money movement, including but not limited to transfers to/from bank IRAs (CD, Money Market), 529s, Bank of America Advantage SafeBalance Banking™, Credit Cards and transfers from IRAs, Loans (HELOC, LOC, Mortgage) and accounts held in the military bank. Accounts eligible for real-time transfers will be displayed online in the to/from drop down menu on the transfer screen.

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured	Are Not Bank Guaranteed	May Lose Value
Are Not Deposits	Are Not Insured by Any Federal Government Agency	Are Not a Condition to Any Banking Service or Activity

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

The performance data contained herein represents past performance which does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance information current to the most recent month end, please contact us.

Net Asset Value (NAV) returns are based on the prior-day closing NAV value at 4 p.m. ET. NAV returns assume the reinvestment of all dividend and capital gain distributions at NAV when paid.

Market price returns are based on the prior-day closing market price, which is the average of the midpoint bid-ask prices at 4 p.m. ET. Market price returns do not represent the returns an investor would receive if shares were traded at other times.

Returns include fees and applicable loads. Since Inception returns are provided for funds with less than 10 years of history and are as of the fund's inception date. 10 year returns are provided for funds with greater than 10 years of history.

Before investing consider carefully the investment objectives, risks, and charges and expenses of the fund, including management fees, other expenses and special risks. This and other information may be found in each fund's prospectus or summary prospectus, if available. Always read the prospectus or summary prospectus carefully before you invest or send money. Prospectuses can be obtained by contacting us.

Expense Ratio – Gross Expense Ratio is the total annual operating expense (before waivers or reimbursements) from the fund's most recent prospectus. You should also review the fund's detailed annual fund operating expenses which are provided in the fund's prospectus.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation ("BofA Corp.").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

Are Not Deposits

Are Not Insured by Any Federal Government Agency

Are Not a Condition to Any Banking Service or Activity