How to Move UTMA to a Minor's Savings Account

by Angela M. Wheeland

    A Uniform Transfers to Minor Act account, or UTMA, is a financial account used by an adult to transfer assets to a minor child. Money or other assets, such as stocks, bonds and mutual funds, in a UTMA account are irrevocable gifts. Although the custodian of the account can access the assets, the asset must be used to benefit the minor. The custodian also has the right to sell and move the assets to another account, such as a regular savings account or college savings account, but it is important to keep a record of each transaction in the event of a dispute.

    Minor Savings Account

    Step 1

    Find a bank or financial institution that allows a minor to have a personal savings account. Savings account options can vary depending on the institution. If you already have an established relationship, the bank might offer the child better interest rates. Discuss interest rates and limitations on the account.

    Minor Savings Account

    Step 2

    Sell or cash in any assets included in the UTMA account. Keep all records of the transaction.

    Minor Savings Account

    Step 3

    Gather your child's Social Security card and any other documentation required by the bank before taking your child to the bank. Most minor savings accounts require a custodian, so bring your own Social Security card and state ID/driver's license.

    Minor Savings Account

    Step 4

    Open the account in your child's name and place yourself as the custodian on the account. Deposit all of the funds from the UTMA into the account. Depending on the child's age, the child might be able to sign the account documents himself. Keep all documentation of the funds transfer.

    College Savings Account

    Step 1

    Research each state's 529 savings plan to determine which plan best meets your needs. A 529 Plan is a college savings account operated by the state or educational institution to help parents save for a child's future college expenses. All money placed in a Section 529 plan is tax deductible as long as the child uses the funds for college. You can open a 529 Plan in any state, regardless of your residence or college the child plans to attend. Information on each state's plan, participating brokers and private plan sponsors is located on the College Savings Plan Network website.

    College Savings Account

    Step 2

    Sell or cash in any assets included in the UTMA account. Keep all records of the transaction.

    College Savings Account

    Step 3

    Contact your broker or a 529 Plan's sponsor to determine the best way to invest the child's money. Investment options for a 529 Plan might include stock mutual funds, bond mutual funds, money markets or individual stocks.

    College Savings Account

    Step 4

    Set up the account. Depending on the state, program or broker you choose, you might have to complete an application before setting up the account. Once you finalize the terms, deposit the child's money into the account. Keep all documentation of the transfer.

    Tip

    • Each time you instruct a broker to buy or sell, your child is subject to broker fees.
    • Transferring the money to a directly-sold college savings plan is less expensive than a broker-sold plan.
    • If you invest in a 529 Plan, and the child does not attend college, the child will owe capital gains tax on the money upon withdrawal.

    Photo Credits

    • Hemera Technologies/AbleStock.com/Getty Images

    About the Author

    Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.

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