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What is UNest, and how does it work?

Why should I open a UNest account?

UNest makes it easy for parents to invest in their children’s future with a simple, flexible, and tax-advantaged custodial account for minors. Plus, your family and friends can contribute funds to your child’s UNest Investment Account for Kids through a shareable gift link. 

What can I use the funds I save in UNest for?

UNest is way more flexible than other saving accounts that can only be used for education. Funds saved can be used across any of your child’s life events like college, their first car, down payment on the house, wedding day or any other important milestone . 

What are the tax benefits of a UNest account for my child? 

Up to $2,200 in annual earnings in a UNest Investment Account for Kids grow in a tax-advantaged way. The first $1,100 of the earnings is completely tax-free. The next $1,100 is taxed at the child’s tax rate. Anything exceeding $2,200 is taxed at the parents’ tax rate. This threshold is only applicable to gains in the account and not to the original contributions.

Where is my money held?

Investment accounts are held with our trusted partner and custodian, Apex Clearing Corporation, a third-party SEC registered broker-dealer and member of FINRA and Securities Investor Protection Corporation (SIPC). This means the investments in your account are protected up to $500,000 in total. Gift funds received but not yet invested are FDIC insured up to $250,000 with our bank partner, First Horizon Bank, Member FDIC.

When can my child access the money in their UNest Investment Account for Kids?

Children can access funds in their UNest account when they reach adulthood. This may be anywhere from 18 to 25. Your state of residence will determine which rules apply to you. 

Is my account FDIC insured?

All UNest tax-advantaged Investment Account for Kids are SIPC-insured up to $500,000 (up to $250,000 for cash claims), with our broker-dealer Apex Clearing Corporation, Member SIPC. Gift funds received but not yet invested are FDIC insured up to $250,000 for your benefit with our bank partner, First Horizon Bank, Member FDIC.

Why invest in UNest instead of 529 plan?

Both 529 plans and UNest custodial accounts provide a great tax-advantaged way for parents and others to help save for a child’s tuition and other educational expenses. UNest’s Investment Account for Kids offers a significant benefit to parents that are looking for a flexible way to save for all the future life stages your child will experience. This may or may not include education. 

In contrast to 529 plans that can only be used for qualified educational expenses, you can use the funds you invest in UNest for any expense that benefits the child named on the account. If an account holder uses funds from a 529 plan for non-education related expenses, they lose tax advantages and earnings are subject to a 10% penalty. 

Is my money safe? 

Security is a priority for UNest. UNest provides the highest levels of security to ensure your information and data is safe. All accounts are protected with 256-bit SSL encryption and continually monitored for extraordinary or suspicious activity by our Compliance team.

In addition, investment accounts are held with our trusted partner and custodian Apex Clearing Corporation, a third-party SEC registered broker-dealer and member of FINRA and Securities Investor Protection Corporation (SIPC). This means the investments in your account are protected up to $500,000 total. Gift funds received but not yet invested are FDIC insured up to $250,000 with our bank partner, First Horizon Bank, Member FDIC.

Is UNest registered as a financial advisor? 

Yes, UNest is a registered investment advisor (RIA) with the U.S. Securities and Exchange Commission (SEC).

What is UTMA/UGMA?

They are investment accounts with a custodian for the minor. The Uniform Gift to Minors Act or Uniform Transfers to Minors Act allows the custodian, such as a parent, grandparent, relative, or friend, to open an account for a beneficiary, such as a child or grandchild. When the custodian sets up the account, the custodian picks what age the beneficiary will take control of the account. This is normally between 18 and 25, depending on the state the custodian resides. This investment account for children receives up to $2,200 in annual tax benefits on the earnings portion. UNest Investment Account for Kids leverages the benefits of UTMAs.

Which is better UGMA or UTMA?

The biggest difference between UGMA and UTMA accounts is that UTMAs allow for more types of assets. While UGMA accounts are typically limited to things you find in most IRAs like stocks, bonds, and mutual funds, UTMAs can also hold things like real estate, art, patents, and even cars.

How will the funds be made available to the child?

On reaching the age of majority, usually 21 years, the minor is entitled to all assets held in the account. UNest will convert the account to the individual brokerage account in the name of the child and your child will be able to continue saving and investing for as long as needed if he/she doesn’t need funds for any immediate needs.

What happens with the account if the custodian of the account dies?

If the custodian of the account dies, a new custodian must be named. The custodian may name a successor upon death by reaching out to UNest customer support. If a successor is not designated and the minor is over age 14, the minor may appoint a successor using a notarized letter.
If something happens with a minor before the age of majority, UTMA money becomes part of the minor’s estate. If the minor does not have a will, the parents would most likely inherit the estate.

Opening Accounts

What do I need to open a UNest Investment Account for Kids?

To open a UNest Investment Account for Kids you need the following information for both you and the child:

  • Legal name
  • Date of Birth
  • Social Security Number or ITIN
  • Address of residency
  • U.S. Citizenship or legal residency information

You also need to connect a U.S. based, verified, personal bank account that you own. 

Why do I need to provide my social security number? 

Financial institutions, like UNest, use your SSN to verify your identity, your child’s identity and to report your interest and investment income or losses to the IRS and to manage your account. It’s important to also note that this information is securely obtained and encrypted in our system with restricted access and additional security measures to keep that information safe. Identity is a priority when opening an account because it is one way to help ensure the integrity of our UNest platform and community. 

Can I open the account if I (or the child) is not a US citizen?

If either you or the child are not a U.S. Citizens, you both need:

  • To have a residential U.S. address
  • Have a Social Social Security Number or ITIN

Additionally, you both need to hold one of the following: 

  • Permanent Resident Card holder (Green Card)
  • E1 Visa
  • E2 Visa
  • E3 Visa
  • F1 Visa
  • G4 Visa
  • H1-B Visa
  • L1 Visa
  • O1 Visa
  • TN-1 Visa

How much does it cost to open a UNest account? 

UNest costs a flat monthly subscription of $2.99 per child. This fee is simple, transparent, and affordable compared to traditional financial advisory fees charged in the market. Our goal is to make it possible for every parent, regardless of their income or background, to plan for their children’s future goals. 

Who can I open an account for?

You can open an account for any child (minor) under the age of 17. The child does not have to be related to you. 

Can I open an account for each of my children?

Yes! And you can manage one or multiple accounts easily through UNest’s iOS or Android apps. 

How do I add a child?

After you create the first child’s account, you’ll see a button to “Add Another Child” on the Home screen within the UNest app.

Can I open an account for a future child?

This feature is coming soon.

Can I open an account for a child that is not mine?

Yes, you may open an account for any child that you would like to invest for. You just need their legal name, date of birth, and Social Security number.

Can I open more than one account per child?

You can only open one account per child, but other people can also open accounts on behalf of the child and act as the custodian to the account.

 
 
Contributions

What is the minimum amount I can contribute each month?

The minimum contribution is $25 per month.

Am I required to set up a monthly contribution when I sign up? 

Yes. As your financial advisor, UNest recommends to start with a disciplined and consistent monthly contributions to keep you on track with your savings goal. UNest makes every effort to democratize and simplify access to investing for your children’s future. We start you off on this plan of at least $25 per month to help you achieve your goals for your children. You may choose to increase this monthly contribution at any time. 

What is the maximum annual contribution?

You can contribute up to $15,000 per individual ($30,000 for a married couple) to a UNest Investment Account for Kids each year free of gift tax.

Can I add money to my account at any time?

In addition to recurring (monthly or twice-a-month) contributions, you can also make one-time deposits at any time.

How will the contribution be made? 

Upon onboarding, you’ll be asked to securely connect a verified bank account that you own. Once you choose your funding source and it’s verified, funds transfer from your bank account via ACH for one-time deposits or set monthly contributions. 

How do I connect my bank account to UNest?

You can securely connect your bank account via instant account verification with our partner, Plaid.

What are some additional ways to receive funds in my account?

There are several ways to receive additional funds in your child’s account:

  1. UNest Rewards. Look for partner offers in the UNest app – when you shop with the brands you love, you can earn investments in your child’s account.
  2. Refer friends. Share your referral link to other friends that would love to start a UNest account for their children. You’ll each receive a $15 reward when they set up a UNest account!
  3. Get Gifts. Have family and friends contribute to your child’s UNest account. (Coming Soon)

Can I pause contributions at any time, and for how long?

Your UNest account is funded through your recurring monthly contributions to help you invest in your child’s future. Your recurring monthly contributions cannot be paused, but if you have concerns or questions, we’re here for you. Please contact Support in your UNest app. 

Can other people contribute?

Yes! Family and friends can contribute gifts for investment to your child’s account using a simple gift link. It’s a great way to include every important person in your child’s life. (Coming Soon)

Are the gifts from family and friends tax-deductible?

No, these are considered cash gifts for your children that are set aside for investment into their UNest investment account.

Can I change the bank I use to make contributions?

Yes. You can update your funding source anytime in the UNest app. 

Main Menu -> “My Profile” -> “Bank Details” -> “Change Bank Details” button

Can I contribute to someone else’s account? 

Yes – you just need to get their UNest gift link. Ask their parent (or custodian who set up the account). This is their link to use anytime you’re in the gifting mood. UNest gifts are easy, meaningful, and perfect for any child! (Coming Soon)

Can I roll over a 529 or another custodial account into my UNest account?

Due to 529 legal requirements, you cannot rollover 529 funds into your UNest account automatically. However, you can still open a UNest UNest Investment Account for Kids and invest in the child you care about with greater flexibility compared to 529 plans. There are no restrictions on the number of investment accounts you can have for the same child. 

 
Investment Options

How is my money invested?

Your money is invested in one of five portfolio options, ranging from very conservative to very aggressive. This includes several age-based options that start at a more aggressive level and become more conservative as the child gets older.

All of UNest’s portfolio options invest in low-cost ETFs. To see which portfolios you’re currently investing in, and the specific investments for each:

  1. Open the UNest app and log in to your account
  2. Tap on the child’s account from the Home screen (each child’s account can have a different portfolio option).
  3. Tap on the “Portfolio” link.

From there you can learn about your current portfolio or select a new option.

What investment options are available?

UNest has five investment options:

  • A conservative option that invests in fixed income and bond ETFs
  • Three age-based options (conservative, moderate, aggressive). Each of these portfolios includes a mix of fixed income and equity investments which shift the investment mix (what’s called rebalancing) from more aggressive to more conservative investments as the child gets older. The goal is to maximize growth at a young age and gradually reduce risk of volatility in the account as they get closer to the time they gain access to the funds.
  • An aggressive option that invests 100% in equities via Vanguard equity index ETFs.

Can I invest in Vanguard ETFs?

All of UNest’s investment options are based on Vanguard ETFs. Some of the portfolio options also include a portion of FDIC-insured cash holdings. 

Can I create a custom investment portfolio in my account?

If you have specific investment objectives that aren’t met by one of the five standard portfolios, please contact support in your UNest app or email us at support@unest.co. 

Can I change my asset allocation at any time?

Although you can change your asset allocation at any time, there may be tax implications to doing so, as we will need to sell your investments to invest them in the new portfolio. Please contact support in your UNest app if you have questions. 

 
 
Taxes and Financial Aid Eligibility

What are the tax benefits to a UNest Investment Account for Kids? 

Up to $15,000 per individual ($30,000 for a married couple) can be contributed free of gift tax. In addition, Up to $2,200 in annual earnings in a UNest account grow in a tax-advantaged way. Please note that contributions  to UTMA accounts are made with after-tax dollars—the donor doesn’t receive an income tax deduction for making them. 

Are my own contributions tax-deductible?

Contributions  to UNest UNest Investment Account for Kids accounts are made with after-tax dollars so as the donor (you), there is no income tax deduction. 

Are the earnings taxed?

Up to $2,200 in annual earnings in UNest account grow in a tax-advantaged way. The first $1,100 of the child’s unearned income is tax-free. The next $1,100 is taxed at the child’s tax rate. Anything exceeding $2,200 is taxed at the parents’ tax rate. This threshold is only applicable to gains in the account and not the original contributions.

How can I claim my tax benefits?

UNest will provide you with a 1099 form. When filing your taxes, you are able to claim your child’s income on IRS Form 8814 and attach that to IRS Form 1040. The IRS has limitations on these claims here. UNest does not give tax advice, and we recommend talking to a tax professional about your specific situation. 

Who is taxed – parent or child?

UNest Investment Account for Kids’ earnings can be taxed either to the child or the parent. Reporting requirements depend on the amount of income the account generates and the beneficiary’s age. 

How will it affect FAFSA and financial aid eligibility? 

A custodial UTMA account is reported as the student’s asset on the FAFSA. Student assets may reduce financial aid by 20%. However, parents can move the money from a custodial UTMA account to a custodial 529 college savings plan account before the child goes to college and reduce the EFC by at least 14.36% (20% – 5.64%) of the value of the account. A 529 college savings plan for a dependent student beneficiary is reported as the parents’ asset on the FAFSA and affects financial aid eligibility by 5.64%.

Will I be penalized when I withdraw money from my investment account?

No, there is no penalty to take the money out. Remember, though, that any funds you withdraw must be used to benefit the child named on the account. Check with your CPA to see what requirements you may need to meet.

 
 
Gifting

How does gifting work?

UNest accounts can receive gifts from family and friends using a simple UNest gift link that you can share with family and friends. Once a UNest gift link is received, it can be used anytime to send gift funds  by credit/debit card or ACH. Gifts are sent directly into a child’s UNest account.

Do I need to create a UNest investment account to receive gifts?

Yes, a UNest account is needed for your child to receive gift funds on UNest. Each UNest account comes with a gift page and a unique UNest gift link to share with family and friends to receive gift funds, anytime! 

Can I receive gifts if I’m expecting?

Yes, you may receive gift funds into your future child’s UNest account before your child arrives. The funds will be held for the intention of investment once your child arrives. A completed UNest account with a child’s social security number is required before those funds can be invested.

Who can send gifts into my child’s account?

Anyone! With a simple UNest gift link that’s shareable, especially on special occasions, now Aunties, Uncles, Neighbors, Grandparents, and friends from anywhere can help build your child’s future.  

What is the minimum amount of the gift?

The minimum gift amount someone can send to your child’s UNest account is $5.

Do I need to sign up to make a gift?

No sign up required for guests to make one-time gifts using a credit card. That’s the magic of UNest gifting- it’s simple. 

How do I give a UNest gift?

Each child’s UNest account comes with a unique gift link to a gift page that’s shareable to family and friends! Use that link to make a gift anytime or recurring. 

What payment methods can I use to send a UNest gift? 

You can use Credit Card, Debit Card, and ACH bank transfer.

Is there a fee to give a gift? 

Children receive 100% of the gift funds you send, always. We charge a standard gifting convenience fee (3.5%+ $0.99) to help us cover the payment and processing costs to provide this service for our UNest families and their children. If using ACH, the gifting fee is 1% + $0.99.

Are the gift funds insured?

A child’s Gift Balance held (gift funds not yet invested) is FDIC insured up to $250,000 for your benefit with our bank partner, First Horizon Bank, Member FDIC. More info.

How do I request UNest gifts instead of physical gifts?

Simply share your child’s UNest gift link anywhere; anytime to receive gift funds for investment.

 
 
UNest Rewards

What is “UNest Rewards”?

UNest Rewards is a way that you can earn cash into your child’s UNest Investment Account for Kids by purchasing products and services with our partners via the UNest app. 

What information do you share with your partners?

We share the bare minimum with our partners in order to confirm that you are eligible for the reward. For our rewards transactions, we pass them an alphanumeric code when you click on an offer. The partner then returns a list of all the alphanumeric codes that completed an offer, and we match that to our internal database to pay out your reward. By using this methodology, we do not have to pass them email, phone number, or any other personal information.

How long will it take to receive my reward?

It typically takes 7 to 10 business days to receive your reward. Many of the affiliate networks we work with take a few business days to report conversions to us, and it takes another few days to deposit that money in your account. In rare cases, it could take a little longer to receive your reward. In order to be eligible for the offers, you must click through the UNest rewards link and complete your purchase in the same session.

 
 
 
Invite Friends

How long does it take to get my reward?

It typically takes 7 to 10 business days to receive your reward. Rewards are paid once the friend you refer has their account approved and makes their first investment.

What is the reward for referring my friends?
When you refer other parents to UNest, each of you receive a $15 gift into your UNest account. From time to time we may offer special promotions to refer friends in addition to our standard $15 bonuses.

 
 
 
 
Fees

How much does it cost to invest with UNest?

UNest costs a flat monthly subscription of $2.99 per child. This fee is simple, transparent, and affordable compared to traditional financial advisory fees charged in the market. Our goal is to make it possible for every parent, regardless of their income or background, to plan for their children’s future goals. For more information about our fees and how they compare to traditional advisory fees, please visit unest.co/pricing/

What is the fee if I have multiple children?

We have made UNest fees transparent, simple and affordable. Our monthly subscription of $2.99 is a per child cost. If you have multiple children, you will be eligible for our family plan with a monthly subscription of $5.98/month.

What is the fee to gift into the child’s account?

There is no fee to receive gifts with UNest. Gifters pay a standard convenience fee for payment processing. Fees are always shown to Gifters for review before they complete their gift.

 
 
 
 
 
 
Bank connection

Can I use an online bank (like Chime) to make contributions?

Yes. We use secure online instant verification with our verification partner, Plaid, to verify your bank account. Over 2,000 financial institutions are supported, and they’re continuously working on adding more. 

What if I experience a problem connecting my bank?

We recommend that you first login to your bank’s online site to check your credentials are correct. While you may try again on UNest, multiple attempts in a short time period with invalid credentials can lock your bank account, or there may be a cool down period before trying again. If you’ve checked your credentials and you’re still receiving an error, your bank may be experiencing an outage or downtime. We rely on our trusted verification partner, Plaid, to securely verify and connect your bank account you own. While Plaid works with over 2000 financial institutions, some banks may have occasional connectivity issues. If you continue to experience an issue, please contact support in your UNest app for help.

 
 
 
 
 
Closing accounts

How do I close my account?

To close your account:

  1. Open the UNest app and log in to your account.
  2. On the Home screen, tap on the child’s account that you want to close.
  3. From the child’s dashboard, tap the “gear” icon in the upper right of the screen and choose “Transfer Funds”
  4. When you’re prompted to select the amount to withdraw, choose “Close Account.”

Your account will be closed and funds returned to your connected bank on file, typically within five business days. There are some exceptions that may take longer or require additional verification (for example, recently opened UNest accounts, recently made contributions or received gifts, or if you have recently changed your connected bank account).

Is there any holding period to take my money out (withdraw)?

In some cases there may be a holding period to receive your returned funds. Your account may be flagged for review for a variety of reasons, including for newly created UNest UNest Investment Account for Kids, recent deposits or received new gifts, or if you have recently changed your connected bank account.

Can I withdraw whenever I want? Are there penalties?

Yes, you can withdraw, penalty-free, from the UNest Investment Account for Kids whenever you want. Remember, though, that any funds you withdraw must be used to benefit the child named on the account. Check with your CPA to see what requirements you may need to meet.

 
 
 
 
 
Education Accounts / 529 Plans

These accounts apply to members who opened a UNest account prior to October 1, 2020.

What is my Education Account?
Your Education account is a 529 plan. It is an account used to save money for educational expenses that grows tax-free. Education accounts have an account owner, who controls the funds, and an account beneficiary, whose education the funds are intended for.

Every education account is sponsored by a state, but the plan does not have to be held in the state where you live or the state where the beneficiary plans to attend school.

While education accounts were originally created for college expenses, it’s also possible to use the money for K-12 tuition.

What is the difference between 529 and UTMA?
Both 529 plans and UNest custodial accounts provide a great tax-advantaged way for parents and others to help save for a child’s tuition and other educational expenses. UNest’s Investment Account for Kids offers a significant benefit to parents that are looking for a flexible way to save for all the future life stages your child will experience. This may or may not include education.

In contrast to 529 plans that can only be used for qualified educational expenses, you can use the funds you invest in UNest for any expense that benefits the child named on the account. If an account holder uses funds from a 529 plan for non-education related expenses, they lose tax advantages and earnings are subject to a 10% penalty.

How much can I contribute?
Contributions to 529 plans are treated by the IRS as gifts, and as of 2020 you can contribute up to $15,000 per year ($30,000 as a married couple) to qualify for the annual federal gift tax exclusion.

It is also possible to “superfund” the next five years of contributions ($75,000 per person or $150,000 as a couple) using the option of one-time deposit, but we generally recommend initiating a recurring monthly contribution, to spread out your contributions over time.

Is it only for college expenses?While education accounts were originally created for college expenses, it’s also possible to use the money for K-12 tuition. Qualified educational expenses include books, room and board, computer equipment and tuition.

What are the benefits of a 529 plan?

Tax-free growth. If your account goes up in value, withdrawals you make for qualified educational expenses are tax-free. In a regular investment account, those withdrawals would subject to capital gains tax.

Favorable financial aid treatment. 529 plans are not treated as student assets on the Free Application for Federal Student Aid (FAFSA), which may increase the amount of aid that the student is eligible for. Additionally, withdrawals by a parent (or student) account owner for educational expenses are not treated as income. Note that withdrawals from accounts held by others for the student (for example, a grandparent, aunt/uncle, etc.) will be treated as untaxed income to the student, which may reduce their eligibility for aid.

What are my restrictions with a 529 plan?
Proceeds from 529 plans need to be used only for qualified educational expenses. Non-qualified expenses are subject to 10% penalty on the earnings portion.

What if I want to spend it on non-qualified educational expenses?
If you withdraw money for non-qualified expenses, you are subject to paying taxes and a 10% penalty on any gains that are part of your withdrawal. The amount of your original contributions are not subject to taxes or the penalty.

What if I want to transfer my Education account to UNest Tax-Advantaged Investment account?
Please reach out to our customer support at support@unest.com to discuss the conversion process.

How do I make a withdrawal request?
You can reach out to our customer support at support@unest.co or follow steps in the app:

  1. Open the UNest app on your iPhone or Android device
  2. Open the Main Menu and select “Withdrawals”
  3. Follow the prompts about the reason for your withdrawal and where you’d like your balance sent.
  4. When you’re prompted, choose how much you’d like to withdraw. You will receive funds in approximately 5 business days.

What if my child doesn’t go to college?
To avoid any taxes or penalties on withdrawals, your best option is to transfer the account to a new beneficiary who will use the money for educational expenses. Otherwise, the gains on any withdrawals from the account will be subject to taxes and a 10% penalty.

Can I transfer the account to another person?
Yes. As the account owner, you can transfer the account to another beneficiary. To maintain the tax advantages, the new beneficiary must be related to the current beneficiary.

Can I use the funds to pay for k-12 school tuition?

Who is your 529 plan with?
Your account is held at Union Bank and Trust. The plan is called BrightDirections and is sponsored by the state of Illinois. It’s one of the top advisor sold plans in the nation.

Why am I getting physical mail about my 529 account?
UNest is your investment advisor, but the underlying investments are held in a state-sponsored 529 plan, which may send you material about your account via physical and/or electronic mail.

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