Savings

Custodial Account

A Uniform Transfer to Minors Act (UTMA) account is a special account that allows you to gift or transfer money to a minor to be used for their benefit. This account is a great way to save on behalf of the child with no contribution limits.

Uniform Transfer to Minors Act (UTMA) accounts in Virginia are called Virginia Uniform Transfer to Minors Act (VUTMA). Virginia allows two custodians to oversee an account.

The account is set up in the name of the minor. However, they do not have access to the funds in the account. The Custodian has complete control of the account. Once the minor reaches the age of 18-21 (depending upon the age chosen by the custodian), the remaining funds should be given to the minor by the custodian.

1. Who is eligible for a VUTMA custodial savings account?

Any person eligible for membership at Bronco Federal Credit Union can open a VUTMA account for a minor. The custodian must be a member of Bronco. The minor must be eligible to become a member of Bronco as well.

2. What are the tax advantages of a custodian account?

The account is opened with the minor’s taxpayer identification number and any reportable dividends would be reported under the minor’s social security number. Consult with your tax advisor for more information on tax implications.

3. How can funds from a custodial savings account be used?

While the child is a minor, funds in a UTMA custodian savings account may be used for education purposes or for any purpose that benefits the minor. Once the minor reaches the age of 18 to 21 years old, the custodian should transfer the funds to the minor.

4. How are the funds in this custodial account insured?

Bronco Federal Credit Union accounts are federally insured by NCUA up to $250,000. To learn more about how your accounts are insured, please visit the NCUA coverage insurance website.

5. What is the difference between a custodian account and an account listing the minor as a “Joint Owner?”

Generally, with a joint owner the minor would have equal access to the funds along with any other account owners. With a VUTMA Account, ONLY the custodian(s) can transact on the account. There is no requirement that joint accounts be closed or paid out once the minor reaches legal age.

6. What happens when the minor turns 18 to 21?

The custodian on the account is required to pay out the balance in the account to the minor once they reach the designated age, as indicated, on the signature card. The “minor” may then open his or her own membership.