Education & Minor Account Profiles
Sourced profiles for accounts designed to hold assets for minors or fund education expenses. These accounts range from irrevocable gifts to minors (UTMA/UGMA), to tax-advantaged college savings (529), to disability savings (ABLE) and the new Trump Account for children born 2025-2028. 2026 limits are sourced from IRS Rev. Proc. 2025-19 and applicable statutes. These pages do not provide personalized investment advice.
Education Savings Accounts
- 529 Education Savings Plan, state-sponsored tax-advantaged plan; contributions grow tax-free; qualified withdrawals (college, K-12 up to $20,000/year, student loans up to $10,000 lifetime, apprenticeships) tax-free; no federal annual contribution limit; gift-tax treatment applies; 529-to-Roth IRA rollovers permitted under SECURE 2.0 (15-year rule, annual Roth IRA limit cap).
- ABLE Account (529A), tax-advantaged savings for individuals with qualifying disabilities; 2026 annual limit $18,000 (gift tax exclusion equivalent); ABLE-to-Work extra contributions up to $18,000 additional; aggregate base $20,000 (state may allow more); funds used for qualified disability expenses are tax-free.
Minor-Beneficiary Accounts
- UTMA Account, Uniform Transfers to Minors Act custodial account; irrevocable gift to minor; custodian manages until state age of majority (18-25, varies by state); kiddie tax applies to unearned income above threshold; broad asset eligibility (real property, royalties, etc. beyond UGMA).
- UGMA Account, Uniform Gifts to Minors Act custodial account; original, narrower statute than UTMA; eligible assets limited to financial assets (cash, securities, insurance policies, annuities); irrevocable gift; no annual contribution limit; kiddie tax applies.
- Trump Account (Money Account for Growth and Advancement), new account type for U.S. citizens born 2025-2028; annual contribution limit $5,000; one-time federal government seed deposit $1,000; employers may contribute up to $2,500/year; invested in a diversified index fund; cannot access before age 18 (limited exceptions); no income limit for eligibility.
Kiddie Tax
The kiddie tax (IRC Section 1(g)) taxes a child's net unearned income above a threshold at the parent's marginal rate. For 2026, the threshold is $2,500 (indexed). "Net unearned income" means investment income (dividends, capital gains, interest) in excess of the child's standard deduction from investments. It applies to:
- Children under age 19, and full-time students under age 24, who have at least one living parent, and
- Children whose unearned income exceeds the threshold.
The kiddie tax affects UTMA and UGMA accounts because those assets belong to the child but are typically invested to produce unearned income. It does not apply to 529 or ABLE distributions for qualified expenses.
Source: IRS Publication 929, Tax Rules for Children and Dependents.
Related Resources
- Investment Account Profiles Hub, all account categories.
- Investment Account Types Overview, full comparison of tax-advantaged account types.
- U.S. Rule & Limit Tracker, searchable registry of current 529 and ABLE rules.
- Retirement Investing Hub, Roth IRA eligibility and rollover rules relevant to 529-to-Roth conversions.