Saving for a child’s future is important. A UTMA (Uniform Transfers to Minors Act) account at Bank of America helps adults save money for kids until they become adults. This guide explains everything about UTMA accounts in simple words with real examples, tables, and clear advice.
What is a Bank of America UTMA Account?
A UTMA account lets adults:
- Save and invest money for a child
- Control the money until the child turns 18-21 (depends on state)
- Use the money for the child’s needs
- Give financial gifts that grow over time
Real Example:
Aunt Maria opened a UTMA account for her nephew Carlos. She saves $50 every month. When Carlos turns 21, he can use this money for college or a car.
UTMA Account Features at Bank of America
| Feature | Details | Benefit |
|---|---|---|
| Account Control | Adult manages until child reaches age | Protects child’s money |
| Investment Options | Stocks, bonds, mutual funds, CDs | Money can grow |
| Tax Benefits | First $1,250 tax-free, next $1,250 at child’s rate | Save on taxes |
| Minimum to Open | $100 | Easy to start |
| Age Limit | Child gets control at 18-21 (state decides) | Automatic transfer when ready |
Pro Tip: UTMA accounts work well for birthday money, inheritance, or long-term savings that don’t need to be for education.
How to Open a UTMA Account at Bank of America
Step 1: Gather Information
- Child’s full name and birth date
- Child’s Social Security Number
- Your ID and personal information
Step 2: Choose How to Apply
- Online through Merrill (Bank of America’s investment side)
- At any Bank of America branch
- By calling customer service
Step 3: Fund the Account
- Start with minimum $100
- Set up automatic transfers
- Add money anytime
Step 4: Select Investments
- Choose from different options based on risk
- Get help from a financial advisor if needed
Real Example:
The Thompson family opened a UTMA account for their daughter Emma at their local Bank of America branch. They started with $500 and add $25 every week.
UTMA vs. Other Child Accounts
| Account Type | Who Controls | Tax Benefits | Best For |
|---|---|---|---|
| UTMA | Adult until age 18-21 | Some tax breaks | General savings |
| 529 Plan | Always adult | More tax benefits | College savings |
| Savings Account | Adult | No special breaks | Small, short-term savings |
Smart Choice: Use UTMA for general savings and 529 plans specifically for college costs.
Frequently Asked Questions (FAQs)
Can the child take out money whenever they want?
No. The adult controls the money until the child reaches the age set by their state (usually 18 or 21).
What happens when the child becomes an adult?
The money becomes theirs completely. They can spend it however they want.
Can I close a UTMA account early?
Only if you use the money for the child’s benefit (like school or medical needs).
Is there a limit to how much I can put in?
No limit, but large gifts might have tax consequences.
What if I change my mind about the custodian?
You can name a successor custodian when opening the account.
Smart Ways to Use a UTMA Account
- Save birthday/ holiday money instead of spending it all
- Invest in stocks for long-term growth
- Teach kids about money by showing them the account
- Prepare for big expenses like a first car or apartment
Real Success Story:
Grandpa Joe put $5,000 in a UTMA account for his granddaughter Lily. After 15 years of growth, it became $18,000 – enough for her college books and a used car.
Potential Problems to Know About
- No take-backs: Money given belongs to the child forever
- Financial aid impact: Counts as child’s asset for college aid
- Tax paperwork: May need to file returns if account earns much
- Limited control: Must spend on the child’s needs
Workaround: For college savings, consider mixing UTMA with a 529 plan.
How UTMA Accounts Help Families
For Parents:
- Safe place to save for kids
- Tax advantages
- Teaches kids about money
For Grandparents:
- Great way to leave money
- See gifts being used
- Simpler than trusts
For the Child:
- Gets money when responsible
- Learns about investing
- Head start on adult life
Real Example:
The Garcia family uses a UTMA account to save money from their restaurant business for their son’s future. They add 2% of profits each month.
Conclusion: Is a UTMA Account Right for You?
Bank of America’s UTMA accounts offer a simple way to save for a child’s future. They work best when:
- You want flexibility (not just for school)
- You’re okay with the child controlling money later
- You plan to invest for long-term growth
Remember:
- Start early – even small amounts grow
- Consider mixing with 529 plans for education
- Teach kids about money as they grow