M1 Plus members can open custodial accounts for a minor. Each contribution to the custodial account is considered an irrevocable gift to the minor (custodial account beneficiary) and the assets in the account are owned by the minor, though managed by the custodian (donor). Once the custodial account beneficiary reaches age of majority in the state you opened their account the custodian will no longer have access to the account and all trading activity will be restricted.
Upon reaching the age of majority, a custodial account beneficiary may liquidate and withdraw the funds via check or transfer the assets to a taxable account they own. The transfer must take place once the minor reaches the age of majority and no further activity will be permitted on the account until the transfer takes place. Please note there are fees associated with check requests.
UTMA vs. UGMA
This designation is dependent on the state in which the account owner resides. Upon opening the custodial account, UTMA/UGMA will be designated according to the beneficiary’s physical address on file. Therefore, it is on the custodian to know at which age the account should be transferred to the beneficiary. The age of majority can range from 18 to 25 years old. You may want to ask a Financial Consultant about the laws in your state.
Custodial Account Type
M1 custodial accounts are registered as cash accounts with no margin capability. Custodial accounts are also taxable accounts and can be transferred to other taxable accounts upon the beneficiary reaching age of majority. Custodial account assets cannot be transferred into an IRA.
Funding the Account
Each deposit into the custodial account is considered an irrevocable gift and there is no maximum amount that can be contributed. Please be aware of any tax implications regarding large deposits. M1 cannot provide any tax guidance so contact a professional tax advisor with questions regarding gift tax.
Any withdrawal from a custodial account must be “for the use and benefit of the minor.” Transfers cannot be initiated from the custodial account to another M1 Invest account under the user login.
Management of Assets
The custodial account will be housed on the login of the custodian who opened the account. The minor must contact their custodian regarding trading, money transfers, and the overall management of the account. M1 support representatives can only speak to the primary user of the login.
- Custodial accounts will remain open and active even if the custodian downgrades from M1 Plus.
- You will no longer be eligible for an M1 Plus refund after opening a custodial account whether you fund it or not.
- Users may open custodial accounts for minors who are not their children. Each deposit into the account is considered an irrevocable gift to the minor, regardless of family relation.
- Both incoming and outgoing account transfers are available via ACATS.