A UTMA or UGMA custodial account lets you save and invest money for a child while keeping it legally in the child's name. The account grows for years without being trapped in a 529 plan, and the child receives full control when they reach the age of majority in your state — typically 18 to 21. This calculator projects exactly how much the account will be worth on that transfer date, factoring in recurring annual gifts, expected investment returns, the tax on earnings (the "kiddie tax"), and how much of your giving stays under the federal gift-tax exclusion.
Adjust the inputs and the projected balance, total contributions, and excess-gift warning update instantly.
How to Use
- Enter the Current Account Balance — whatever is already sitting in the custodial account today. If you are opening a brand-new account, set this to $0.
- Set the Annual Gift per Donor — how much each giver plans to contribute every year. The federal annual gift-tax exclusion is $18,000 per donor (use the latest IRS figure if you know it), so a married couple can normally give $36,000 per year, per child, without touching their lifetime exemption.
- Choose the Number of Donors. Pick 2 when both parents contribute; pick 1 for a single parent, or when only one grandparent is funding.
- Type the Child's Current Age, then choose the Age of Majority (Transfer). Most states release UTMA assets at 21, but several still use 18; a few extend to 25. Confirm your own state's rule.
- Set the Expected Annual Return — 6% to 8% is a reasonable long-run assumption for a balanced portfolio. Use 0% to see a no-growth baseline.
- Set the Estimated Tax on Investment Earnings. Under the kiddie tax, the first slice of a child's unearned income is tax-free, the next slice is taxed at the child's rate, and amounts above the threshold are taxed at the parent's marginal rate. Enter your blended estimate (often 10%–24%).
- Leave Annual Gift Tax Exclusion at its default unless the IRS has announced a new figure for the current year.
The result card shows the years until transfer, total contributions, the projected balance on transfer day, after-tax growth, and any annual gift that exceeds the exclusion and might require filing IRS Form 709.
How the Projection Works
The engine compounds the balance once per year, after tax, and adds the recurring gift at the end of each year:
balance_y = balance_(y-1) × (1 + r × (1 − t)) + giftPerDonor × numDonors
Where:
- r is the expected annual return.
- t is the estimated tax rate on earnings, so growth shown is after-tax.
- giftPerDonor × numDonors is the total annual gift added that year.
For example, starting at $10,000, gifting $18,000 from each of two donors ($36,000/year) for 16 years at a 7% return with a 10% tax drag grows the account to roughly $973,928. Total out-of-pocket contributions are about $586,000, meaning investment growth contributes nearly $388,000 — almost two-thirds more than the cash actually deposited.
Gift Tax and the Kiddie Tax
Each year, a donor can give up to the annual exclusion ($18,000 per person in recent years) to any number of recipients without filing a gift-tax return and without reducing the lifetime estate-and-gift exemption. A married couple splitting gifts doubles that amount per child. Anything above the per-donor exclusion is not necessarily taxed today — it usually just consumes part of your lifetime exemption and may require Form 709.
On the investment side, unearned income inside a minor's UTMA/UGMA is subject to the kiddie tax: the first small amount is tax-free, the next small amount is taxed at the child's low rate, and anything above that threshold is taxed at the parent's marginal rate. That is why this calculator lets you subtract an estimated tax rate from the return — a 7% nominal return with a 10% tax on earnings behaves like about 6.3% net.
Examples
Example 1 — Two parents, steady gifting. A couple with a 5-year-old contributes $18,000 each year (both parents, $36,000 total) into a UTMA, starting from $10,000, at a 7% return taxed at 10%. By age 21, the calculator shows about $973,928, built from $586,000 of contributions and $387,928 of after-tax growth. Because $18,000 sits exactly at the exclusion, no excess-gift warning appears.
Example 2 — Starting from zero. A family opens a new UGMA for a newborn-equivalent case: current balance $0, $18,000 from two donors, 7% return, 10% tax, transferring at 21 years old after 16 years. The account reaches roughly $947,349 from $576,000 contributed.
Example 3 — A large inheritance inside the account. A grandparent has already funded the UTMA with $1,000,000 and keeps adding $50,000 per donor each year for an 11-year-old (transfer at 21). The projection lands near $3,479,256 on $2,100,000 of contributions. However, because $50,000 per donor exceeds the $18,000 exclusion by $32,000 per donor ($64,000 total), the calculator flags the excess gift — worth a Form 709 conversation with a tax professional.
Example 4 — Conservative no-growth baseline. Setting the expected return to 0% shows what happens with no market help: $10,000 plus $36,000 a year for 13 years simply equals $478,000, with $0 growth. It is a useful stress case during volatile markets.
FAQ
What is the difference between UTMA and UGMA?
UGMA (Uniform Gifts to Minors Act) is the older version and holds mostly cash, stocks, bonds, and insurance policies. UTMA (Uniform Transfers to Minors Act) expands the allowed assets to include real estate, patents, royalties, and other property. Both are custodial accounts: one adult acts as custodian, the minor is the owner, and control transfers at the state-defined age of majority.
At what age does a UTMA/UGMA transfer to the child?
It depends on your state. Many states release the funds at age 21; others still use 18; a handful allow or require extension to the late teens up to 25. Set the Age of Majority (Transfer) field to the rule that applies in your state, because the projection changes materially with even a two-year difference.
How much can I contribute to a UTMA each year without gift tax?
The annual federal gift-tax exclusion is $18,000 per donor per recipient in recent years. A married couple can give $36,000 per child per year by splitting the gift. Amounts above the per-donor exclusion generally are not taxed immediately — they reduce your lifetime estate-and-gift exemption and may require IRS Form 709. Always confirm the current-year exclusion with the IRS or a tax advisor.
Does a UTMA/UGMA get taxed?
Yes. Investment earnings in the account are reported on the minor's tax return and are subject to the kiddie tax: the first slice of unearned income is tax-free, the next slice is taxed at the child's rate, and anything above the threshold is taxed at the parent's marginal rate. This calculator applies your estimated tax rate to the annual return to show after-tax growth.
Will a UTMA hurt my child's financial aid?
Custodial accounts are considered the child's assets, and child-reported assets are assessed more heavily in federal financial-aid formulas than parent assets. Families chasing large need-based aid may prefer 529 plans, which are treated more favorably. Run the expected family contribution numbers before maxing out a UTMA.
Can I withdraw the money early for myself?
No. A UTMA/UGMA account legally belongs to the minor. The custodian may spend the money only for the child's benefit — education, medical, enrichment expenses — not for ordinary parent obligations. Taking funds back for personal use breaches the custodianship.
What happens when the child reaches the transfer age?
The child gains full, unrestricted control of the account and can spend the money however they choose — including on something other than education. Many parents use the years leading up to transfer to discuss money management, or consider rolling the balance into a Roth IRA once the child has earned income.
Disclaimer
This UTMA/UGMA calculator is provided for informational purposes only and does not constitute financial, tax, legal, or investment advice. Projections are estimates based on the inputs you enter; actual investment returns, tax rates, the annual gift-tax exclusion, and your state's age-of-majority rules will differ and may change over time. Gift-tax, kiddie-tax, and financial-aid treatment are complex and depend on your individual circumstances. Consult a qualified tax professional or financial advisor before making contribution, investment, or gifting decisions.