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Beginner's Guide to UGMA and UTMA Custodial Accounts


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Withdrawal Rules and Treatment of Unused Funds for Custodial Accounts

Withdrawal Rules:

A withdrawal can be initiated by the custodian for the benefit of the child, as long as the expenses are for legitimate needs. Withdrawals are not limited to college costs, and can be used for pre-college educational expenses.

Treatment of Unused Funds:

Any unused money must be distributed to the child by the time they reach the age of majority or the maximum age allowed for custodial accounts in their state. For classic UGMA accounts, this is generally age 18. For the newer UTMA accounts, this is usually age 21, but may be as late as age 25.

Unlike Section 529 plans and Coverdell ESA’s, there’s no ability to transfer the account to another child or change beneficiaries.

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