Called the Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors (UTMA), depending on what state the minor resides in, lets you transfer assets to a minor and take advantage of the child’s potentially lower tax rate to help build college savings.
- Assets are held in a custodial account. The beneficiary takes control at age 18 or 21, depending on the state.
- A portion of the earnings is exempt from tax, an equal portion is taxed at the minor’s rate, and earnings beyond that are taxed at the higher of the child’s or parent’s rate*
- Funds are to be used for the benefit of the minor. They are not required to be used for education expenses.
- There’s no limit on the amount you can transfer, though gift taxes may apply**
- UGMA/UTMA assets may affect a student’s financial aid award
Make a Coverdell Education Savings Account part of your college tuition fund and savings plan. Call or visit your nearest Associated Bank branch location for details today.
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