A custodial account is an account set up and managed by an adult for the benefit of a minor. It is established under a particular state's Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA).
How fast your child's custodial account grows is largely a function of the investments that you choose. We'll help you build a well-diversified account that's based on your values, risk tolerance and goals. Plus, when you choose one of our investment programs, your dedicated investment adviser will help you stay on track.
| Choose your preferred investment option: |
|
Azzad Mutual Funds |
Ethical Wrap Program |
Download Important Information |
Prospectus |
Wrap Brochure |
Minimum to open |
$500 |
$10,000* |
Download Custodial Application |
Application |
Application |
| Contributions |
Eligibility |
Anyone may establish a custodial account on behalf of a minor. The minor and custodian must have a social security number and must be U.S. residents. No limit on who can contribute to the account. Generous grandparents have a place to transfer money for their kid's college education! |
Contributions |
No lifetime limit |
Contribution Deadline |
December 31 |
Minor Eligibility |
Minor must be under 18 or 21 (depending on state) in order for you to open custodial account |
Assets |
Any money placed in the account is an irrevocable gift to the child. This means they cannot be taken back and must be used for the benefit of the child. |
Tax Advantages |
Annual gift tax exclusion |
Federal tax law allows contributions of up to $12,000 ($24,000 for married filing jointly couples) for tax year 2008 per beneficiary without incurring gift tax (up to $13,000 and $26,000 for married couples for year 2009) |
Annual tax treatment |
Annual tax treatment on unearned income- interest, dividends, and capital gains generated in the account: |
Child's age at end of tax year |
First $900 ($950 year 2009) |
Additional amount taxed at child’s rate $900 ($950 for year 2009) |
Any Amount over $1,800 ($1900 for year 2009) |
Under 18 |
Tax-free |
Taxed at child's tax rate |
Taxed at adult's tax rate |
Over 18 |
Taxed at child's tax rate |
Taxed at child's tax rate |
Taxed at child's tax rate |
| Withdrawals |
Withdrawals by adult |
Withdrawals may be made any time for the benefit of the minor (for college expenses or anything else) |
Withdrawals after minor gains control |
Withdrawals may be made any time for any purpose |
| Key Strengths |
Key Tradeoffs |
|
- Easy to open and maintain
- Opportunity for tax savings
- Grandparents and friends may contribute
|
- Child gains control at age 18 or 21
- May be used for expenses other than college
- May negatively impact financial aid
|
* This information is not intended as tax advice. For more complete guidance on your particular financial situation, please consult your tax advisor or speak to an Azzad investment advisor at 888-862-9923. Please make sure to read the Azzad mutual funds' prospectus or Ethical Wrap Program's brochure before you invest. The wrap minimum applies after meeting standard minimum with other accounts.
