UTMA funds to Contribute to Roth IRA

We have a client who is a custodian of a UTMA account for their child. If the child has earned income and could contribute to a Roth IRA, could funds be taken from the UTMA and contribute to the Roth IRA? Both are still custodial, and will become the child’s at 21 years of age anyways. Thanks!



Yes, the UTMA could fund a Roth contribution in this situation.



Keep in mind any unearned income from the UTMA account or other sources will be subject to Kiddie Tax rules.

  • Any total unearned income including capital gains, interest, dividend/capital gain distributions and other sources of unearned ordinary income) will be subject to 2022 Kiddie Tax rules.
  • If their earned income is < ($12,950 - $350 = $12,600), their standard deduction will be the lessor of ($350 + earned income) or $1150.
  • The next unearned income of ($2300 – their standard deduction) will be subject to their individual tax rates.
  • Unearned income > $2300 will be taxable at their parent’s marginal tax rates 


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