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A custodial account is a popular way for parents and guardians to invest for their children’s future. Accounts are easy to set up and manage, and the adult custodian can choose from a wide range ...
529 account: Most parents save for college in 529 plans, which allow you to invest after-tax money into diversified, low-cost stock and bond funds and then withdraw the money tax-free for ...
Here’s how custodial accounts work.
The current rule is that for beneficiaries under 19 (under 24 if a student), the first $1,050 of unearned income is tax-free, the second $1,050 is taxed at the minor's rate (typically 12%), and the amount over $2,100 is taxed at the ordinary and capital gains rates applicable to trusts and estates. UGMA and UTMA accounts can invest in the stock ...
The custodian is often the minor's parent. In the U.S., this type of account is often structured as a Coverdell ESA, allowing for tax-advantaged treatment of educational expenses. Another form is a trust account owned by an individual or institution, managed by a named party for purposes of rapid distribution of funds in that account. This is ...
Given contentions and open questions about precisely how to structure Children's Savings Accounts for the greatest return on investment, most practitioners and advocates have argued for a role for CSAs and other asset initiatives as complements to the current financial aid system, [31] components of financial institutions’ offerings to ...
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Once the minor account holder turns 18, they become a joint holder with equal privileges as the adult joint holder. Best for the highest APY on a limited balance BECU Early Saver Youth Savings Account