UTMA | Ed Slott and Company, LLC


Who is the DB when an IRA is payable to the custodian of an UTMA? If the DB is the UTMA beneficiary, is the distribution to the UTMA reported on the child's income tax return? Thank you.

  • Of course, a minor child of the IRA owner will be an EDB, while other minors will be subject to the 10 year rule. Therefore, the EDB child of the owner will have to receive annual RMDs which create exposure to the kiddie tax, while the 10 year rule minors will not have annual RMDs, but might have discretionery distributions.
  • Taxation of a child's income is too complex to review here, but basically if the child has enough income to require filing a return, and if the unearned income including taxable IRA distributions exceeds 2,200, the child that meets certain age requirements will have to file Form 8615 and calculate the tax using the applicable parent's rate (kiddie tax). IRA income for a child cannot be reported on a parent's return.

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