Is a UTMA account good for college savings?
This is a possibility, but a 529 account may actually be a better choice if the purpose of the account is confined to college savings. The funds in this type of account can only be used for educational expenses, and you can take back the money yourself at any time if you choose to do so.
The tax advantages are more significant when you have a 529 plan. Investments can grow free of taxation, and withdrawals that are used for approved educational purposes are not taxed.
On the other hand, UTMA and UGMA account income above $1100 is taxable. The first $1100 above the initial threshold is taxed at the child’s rate, and income that exceeds $2200 would be taxed at the parents’ rate.