SIE practice questioneasyCustodial Accounts
An investor wants to open an account for their 12-year-old child to manage a birthday gift inheritance. Which account is most appropriate?
- AMargin account
- BUGMA/UTMA custodial account✓ Correct answer
- CTraditional IRA
- D401(k)
Explanation
Why B — UGMA/UTMA custodial account
UGMA/UTMA custodial accounts are specifically designed for minors, with an adult (the custodian) managing the assets until the child reaches the age of majority. Margin accounts and retirement accounts like IRAs and 401(k)s are not available for minors.
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