Invest for any milestone by opening a UTMA account for a child
A UTMA (Uniform Transfers to Minors Act) account is a custodial account that helps you save, invest and gift assets for a child's future, supporting goals beyond education. It's an alternative to a 529 plan or other education savings accounts, offering flexibility and no annual contribution limits.
Why choose a UTMA account with J.P. Morgan?
Key considerations:
- Friends and family can open and contribute
- A portion of unearned income may be tax-free; additional amounts may be taxed at the child's rate or the parent's rate under "kiddie tax" rules
- Transfers to child at adulthood (varies by state)
- Included in financial aid calculations
Unlimited contributions
Save and invest as much as you want with no annual contribution limits, subject to federal gift tax rules.
Flexible use of funds
Use funds for any expense that exclusively benefits the child—education, a first car, an apartment or a home and more.
Wide investment choices
Invest in a wide range of stocks, ETFs (from index funds to cryptocurrency), mutual funds, money market funds, treasuries and more.
No early-withdrawal tax penalty fees
Access funds at any time for the child’s key milestones or needs, without penalties, so long as it exclusively benefits them.
Here’s how you can invest with a UTMA account
To get started, you’ll need:
- Your Social Security number
- Your driver’s license number
- Your employer information
- The birth date and Social Security number of the minor
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What's the difference between a UTMA account and a 529 plan?
A UTMA account can be used for any expense that exclusively benefits a child, whether it's college, a car or a first apartment. A 529 plan is designed specifically for education savings. This chart is a general overview comparing these two options.
UTMA (custodial) account | 529 plan |
|---|---|
Who can open it? | |
Parent, guardian or another adult | Parent, guardian or another adult |
Initial deposit | |
No minimum | No minimum (varies by state) |
Who can contribute? | |
Anyone | Anyone |
Annual contribution limit | |
No legal contribution limit, but contributions are subject to federal gift tax rules | No annual limit; most states limit total contributions |
Tax benefits | |
A portion of unearned income may be tax-free; additional amounts may be taxed at the child's rate or the parent's rate under “kiddie tax” rules (generally applies until age 19, or 24 if a full-time student). | The earnings in a 529 plan grow tax-deferred. Withdrawals for qualified education expenses are tax-free. If funds are used for non-qualified expenses, only the earnings portion is subject to ordinary income tax and a 10% federal tax penalty; the principal can be withdrawn without tax or penalty. For more information, please see the IRS guidance on 529 plansOpens overlay. |
Who controls it? | |
Custodian, until child reaches adulthood, typically 18 to 21, depending on the governing state | Account owner |
When can the funds be used? | |
Anytime, for any purpose that exclusively benefits the child | Anytime, tax-free for qualified higher education expenses |
Penalty for early withdrawal? | |
No early withdrawal tax penalty fees, but you still owe taxes on any income your investments earn | Yes, if used for non-educational expenses |
Financial aid impact | |
Counted as the student’s asset; may reduce eligibility for need-based aid | Counted as a parent asset (if owned by parent); generally has a smaller impact on need-based aid |
How can I open one with J.P. Morgan? | |
Invest online and get unlimited commission-free online trades when you open a J.P. Morgan Self-Directed Investing account, or work with an advisor to get a personalized financial strategy built for you and your unique goals | Work with an advisor to open a 529 plan for your child's future. Learn more |
Featured reads on UTMA accounts
What are my options to save for my children’s education?
Frequently asked questions
Custodial accounts are financial accounts containing cash, stock and potentially other assets, set up and managed by parents or other guardians for the benefit of a child or dependent, who is the owner. UTMA (Uniform Transfers to Minors Act) and UGMA (Uniform Gift to Minors Act) are two types of custodial accounts.
Both UTMA and UGMA accounts are types of custodial accounts set up for a child's benefit. The main difference is that a UTMA account allows for a broader range of assets—including physical property like real estate—while UGMA accounts are limited to cash and financial securities. At J.P. Morgan, UTMA accounts offer a wide range of investment choices as stocks, ETFs and mutual funds. We do not offer UGMA accounts, and UTMA accounts at J.P. Morgan do not support physical assets like real estate.
No, once assets are transferred into a UTMA account, they legally become the child's property and cannot be taken back by the contributor or changed to a different beneficiary.
Parents, guardians or other adults can open and manage a UTMA account for a minor.
There are no annual contribution limits, but federal gift tax rules apply. Each individual can contribute up to $19,000 in 2026 without incurring gift tax or requiring a gift tax return. Married couples can contribute $38,000 if each spouse contributes separately from their own funds. For more information, see the IRS websiteOpens overlay for guidance on gift tax.
When a child reaches adulthood (typically 18 to 21, depending on the governing state), all assets transfer to the child, giving them control and access to their funds.
UTMA accounts offer tax benefits through the “kiddie tax” rules. In 2026, the first $1,350 of a child’s unearned income is tax-free, and the next $1,350 is taxed at the child’s rate. Any unearned income above $2,700 is taxed at the parent’s marginal rate. The IRS provides specific forms and publications for reporting this income. Consult a tax advisor for guidance on your individual situation.
Yes, assets in a UTMA account are considered the student's property and are included in financial aid calculations, which may reduce eligibility for need-based aid.
The funds in a UTMA account must be used exclusively for the child's benefit and cannot be used for anyone else's benefit, including yours as the custodian. Appropriate uses can include things like education, extracurricular activities or other opportunities that support the child's growth and well-being, like purchasing a car, sports equipment or fees associated with classes the child is attending.
Keep in mind that everyday expenses you're already responsible for, like food, clothing, and housing, typically don't count as an exclusive benefit.
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