Merrill Edge Custodial Account 2026 — UGMA/UTMA Guide

A Merrill Edge custodial account (UGMA/UTMA) lets parents, grandparents, and guardians invest on behalf of a minor using Merrill Edge’s brokerage platform — with the added advantage of Bank of America integration through the BofA Rewards (formerly Preferred Rewards) programme. No minimum balance, $0 commissions on stocks and ETFs, and access to BofA Global Research reports.

What Is a Merrill Edge Custodial Account?

A Merrill Edge custodial account is a UGMA or UTMA brokerage account managed by an adult custodian on behalf of a minor. The custodian controls all investment decisions until the minor reaches the age of majority:

• UGMA: Typically 18 in most states
• UTMA: 18–21 depending on state

At the age of majority, the account transfers to the adult child as a standard Merrill Edge brokerage account.

Key features:

The BofA Rewards Connection

Merrill Edge’s differentiator for Bank of America customers is BofA Rewards (formerly Preferred Rewards), which sets a tier from combined balances in qualifying Bank of America deposit accounts and Merrill investment accounts:

Bank of America decides which accounts qualify, and a custodial account is owned by the minor, so confirm with Bank of America whether it counts before relying on it to reach a tier.

Investment Options

A Merrill Edge custodial account provides access to:

• US stocks — any NYSE/Nasdaq-listed stock
• ETFs — all major ETFs commission-free; iShares ETFs (BlackRock) are Merrill’s preferred brand
• Mutual funds — thousands of no-transaction-fee options
• Bonds and CDs — Treasuries, corporate bonds, CDs
• Options — subject to custodian approval
• BofA Global Research — institutional equity research for informed decision-making

Best ETFs for a Merrill Edge Custodial Account

Since iShares ETFs are prominently featured at Merrill Edge, these are natural choices:

Simple portfolio: 70% ITOT + 30% IXUS = ~0.05% blended cost for global equity coverage.

Tax Rules: Kiddie Tax and Custodial Accounts

A Merrill Edge custodial account is a taxable account. The Kiddie Tax applies to dependent children under 19 (or under 24 if a full-time student):

Choose low-dividend, low-turnover ETFs (like ITOT or IVV) to minimise annual taxable distributions. Avoid high-yield dividend funds in a custodial account unless you’ve accounted for the Kiddie Tax impact.

FAFSA Impact

Custodial account assets count as the student’s assets on the FAFSA, reducing financial aid eligibility by up to 20% per year. For families who plan to apply for need-based aid, consider whether a parent-owned 529 plan (5.64% impact) or Roth IRA (not counted) might be more advantageous.

Worked Example: Merrill Edge Custodial with Regular Contributions

Parents open a Merrill Edge custodial account for a child at age 3 and invest $100/month in ITOT (0.03%):

At 18 or 21 (state-dependent), the child receives the full account balance — an 18-year compounding head start.

Merrill Edge vs. Fidelity Custodial Account

Fidelity’s ZERO funds (0.00% expense ratio) give it a cost edge. Merrill Edge’s BofA Rewards integration gives it an advantage for existing BofA customers.

How to Open a Merrill Edge Custodial Account

1. Log in to Merrill Edge (or create an account via merrilledge.com)
2. Navigate to “Open Account” → select “Custodial Account”
3. Enter your information as custodian and the minor’s details including Social Security Number
4. Fund the account via bank transfer (seamless from BofA accounts) or check
5. Begin investing — ITOT (iShares US Total Market, 0.03%) is a natural starting point

Internal Links

• Merrill Edge vs. Fidelity comparison
• Merrill Edge Preferred Rewards guide
• How to open a Merrill Edge account
• Merrill Edge vs. Schwab comparison
• Merrill Edge investing hub

Bottom Line

A Merrill Edge custodial account is the natural choice for Bank of America customers who want to consolidate family finances in one ecosystem. The BofA Rewards integration, BofA Global Research, and iShares ETF access make it a capable custodial account — comparable to Fidelity and Schwab but with the added BofA banking synergies. Fidelity’s ZERO funds hold a cost edge, but for BofA households Merrill Edge’s integration is often more valuable.

This article is for educational purposes only. Consult a tax professional for personalised guidance. All investments carry risk, including the possible loss of principal.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.