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- Ally is gifting $250 in a custodial account to babies born on December 31, 2020.
- You don't have to be the baby's parent or a current Ally customer to open the account.
- You must provide the child's social security number and birth certificate between January 15 and July 31 to qualify for the $250 bonus.
- Legally, the funds must be used to benefit the child, and they'll have total control over the account once they turn the age of consent.
- Read Business Insider's complete review of Ally »
If your baby is born on December 31, 2020, they could qualify for a birthday gift from online bank Ally: $250 in a custodial bank account.
Ally President Di Morais told Business Insider the bank is giving this bonus to help provide a happy ending to a difficult 2020.
"Let's all end the year on a positive note, and what's more positive and joyful than the birth of a newborn?" she said.
How a baby can receive $250 from Ally
Only certain children will qualify for the $250 gift. A baby is eligible if it meets all of the following criteria:
- The child must be born between 12:01 a.m. and 11:59 p.m. in local time on December 31, 2020
- The baby must be a US citizen or a legal permanenent resident
- You must provide Ally with the baby's social security number and birth certificate
- You need to provide the mother's maiden name
- The baby should have a residential address in one of the 50 US states, Guam, or the US Virgin Islands
To open a custodial account, visit the landing page between January 15, 2021, and July 31, 2021, and enter the baby's social security number. You can start the process before you have a birth certificate in hand, but you must send Ally a copy of the birth certificate by July 31 to qualify for the bonus.
Ally will deposit the $250 within 30 days of verifying the child's birth certificate.
A parent isn't the only person who can open a custodial account on the baby's behalf. Any adult can open the account — a grandparent, aunt, uncle, or family friend — and you don't have to already be an Ally customer.
A baby can only receive one $250 gift, even if you open multiple accounts in their name. But if you're opening separate custodial accounts for twins or triplets, for example, each one is eligible for their own cash bonus.
What is a custodial account?
A custodial account is a bank account for someone under age 18 that's managed by an adult. You'll choose between two types of custodial accounts with Ally: an UTMA (Uniform Transfer to Minors Act) or UGMA (Uniform Gift to Minors Act).
How UTMAs and UGMAs work
UTMAs and UGMAs are investment accounts, so the child's money can grow over time. These accounts are sort of like 529 plans, except with different tax advantages and more flexibility about how the money can be spent.
When you set up an UTMA/UGMA for a minor, you don't technically own the account — the child does. You can't use the funds for anyone other than the baby, and you can't transfer the account to yourself or to another child.
The child will have access to the account when they turn the age of majority. The age of majority varies by state, but in most cases, it's 18 or 21 in the US. Once the child owns the account, it's no longer an UTMA/UGMA — it becomes a taxable brokerage account, and the rules for a taxable brokerage account then apply.
How UTMAs and UGMAs are different
How do you choose between an UTMA and an UGMA? Here's how they differ:
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|Allows real assets||✓||x|
The two accounts are very similar, but there are two main differences: UTMAs are not available in South Carolina or Vermont, and UTMAs can contain real assets, such as a car or house.
Check out Business Insider's guide to UTMAS and UGMAs to learn more about how they work.
What to do after the $250 arrives in the custodial account
Morais' main tip for making the most of a custodial account is probably similar to advice you've heard about savings in general: make regular contributions.
If you set aside even just $20, $50, or $100 per month, the child will have money to spend on rent, education, or car when they turn the age of consent.
Ally has several savings tools on its website and app that help you automatically save. For example, the Surprise Savings feature assesses your checking account three times per week to see if you can afford to save any money. If Ally sees you have extra cash, the bank transfers money to another one of your Ally accounts. These sorts of tools can help you save more for the New Year's Baby long after the $250 hits their account.
Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews.
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