Build a child's education savings with UGMA and UTMA accounts

These custodial accounts named for the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) let investors take advantage of the lower tax rate for children while saving for education.

Who would benefit?

Clients who want a tax-advantaged investment
For 2024 anyone can contribute up to $18,000 per child each year free of gift tax consequences ($36,000 for married couples). This amount is indexed for inflation and may increase over time. Because contributions are made with after-tax dollars, a deduction cannot be made.

For children under age 19 and for full-time students under age 24 whose earned income is less than one-half of their support, the first $1,300 of earnings is tax-free. Earnings between $1,300 and $2,600 are taxed at the child’s rate; earnings above $2,600 are taxed at the parents’ rate.

Clients who aren’t confident the beneficiary will attend college
UGMA/UTMA accounts aren’t limited to education expenses. Withdrawals can be used for anything that benefits the beneficiary.

Clients who want the beneficiary to gain control of the account
Once the age of majority has been reached — 18 or 21 in most states — the beneficiary is entitled to the account.

Clients who expect to make large contributions
There are no contribution limits on UGMA/UTMA accounts.

Other resources

Application for individual or joint accounts

Compare education savings accounts

Compare three popular ways your clients can save for education

College savings calculator

Compare the cost of different colleges or use national averages for either public or private colleges

Account setup and service

To set up a new UGMA/UTMA account, visit the Account Resource Center to easily access all of the required paperwork, resources and more.


All American Funds with the exception of American Funds College Target Date Series® are available for UGMA/UTMA account investments.

Objective-focused — These funds of funds offer broadly diversified portfolios in a single investment.

Customization — Build an education savings portfolio of your preferred American Funds, or select a single-fund option. Either way, you control the investment mix.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.