What's the difference between a UTMA/UGMA custodial account and a 529 for saving for my child?

A 529 plan is purpose-built for education: it grows tax-free and withdrawals are tax-free when used for qualified education expenses, and it stays under the parent's control. A UTMA or UGMA custodial account is a general-purpose account holding assets for a minor that can be used for anything benefiting the child, not just school. The trade-offs are meaningful. Custodial accounts have no tax-free growth; earnings are taxed under the kiddie tax rules the IRS sets. They also become the child's outright property at the age of majority (often 18 or 21 by state), so your teenager could spend it however they like. On financial aid, a 529 owned by a parent is assessed lightly, while a custodial account counts as the student's asset and reduces aid more. For pure college saving, a 529 usually wins.