How does a UTMA/UGMA custodial account compare to a 529 for college savings?

A UTMA or UGMA custodial account holds money or investments in a minor's name, managed by an adult until the child reaches the age of majority (18–21 depending on your state). Unlike a 529, the money isn't restricted to education — it can fund a car, a gap year, or anything else once the child takes control. That flexibility is also the catch: the child legally owns it and can spend it however they like at adulthood, and custodial assets count heavily against financial aid (assessed at 20% on the FAFSA versus about 5.6% for a parent-owned 529). Earnings are taxed under "kiddie tax" rules rather than growing tax-free. For pure college saving, a 529 usually wins; a custodial account suits broader goals where you accept giving up control.