<p>We have 529 accounts for each child. Do we show the total of both accounts as assets of the parent on each FAFSA. Or hers as an asset on her FAFSA and his as an asset on his FAFSA. I am thinking the former - my husband thinks the latter. Hope he's right (don't often say that :) )</p>
<p>Anyone know how to show 529 account info? The instructions for filling out the FAFSA show the following under the student asset questions</p>
<p>
[quote]
You should report the value of all qualified educational benefits or education savings accounts, such as Coverdell savings account, 529 college savings plan, or the refund value of a 529 state prepaid tuition plan in Question 44 if you or your spouse own the account and you are not reporting parental information on this application.
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<p>But for the parent asset instruction it says:</p>
<p>
[quote]
Your parents must report in Question 88 all qualified educational benefits or education savings accounts, including Coverdell savings accounts, 529 college savings plans, and the refund value of 529 state prepaid tuition plans that they own. Your parents should not report any accounts owned by a dependent student in this question
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<p>I'm confused</p>
<p>All 529s, even prepaid, are definetly counted as a parent asset, this has been the case for less than 1 year. So long as the parent maintains control of the account = is the account owner.</p>
<p>Thank you Mizo. I started off thinking I knew that and then I read more stuff and got more confused!</p>
<p>More on the recent clarification of 529 plan financial aid treatment here:</p>
<p>I just came from a mtg with financial advisor - who turned out to be as confused as me! It IS clear that 529 plans are a parent asset on both the profile and the FAFSA, BUT my question is about an UTMA acct.
It seems that it is the student's asset on the profile and the parent's asset on the FAFSA - could this possibly be true?? On the FAFSA parent asset question it reads, "investments include real estae.., trust funds, UGMA and UTMA accounts, ...."
It seems clear.
Does anyone know the answer? This could make a sig. difference for our EFC.</p>
<p>Legally (for non-financial aid purposes), the funds in the UTMA are owned by the minor. When the minor reaches a certain age, often older than the age of majority, he or she has an absolute right to the money. You cannot change the beneficiary once named. The funds are listed under the minor's social security number. (In a 529, the parent is the absolute owner of the money. If the kid doesn't go to school, the parent can withdraw it and use it for any purpose. The parent can also change the beneficiary if desired.)</p>
<p>Given that, I believe that the UTMA account is a student asset. (The FAFSA says the same thing about UTMA in the student's assets section.)</p>
<p>Yeah, but the issue is the reporting requirements, more than the ownership. So it's more complex than that.</p>
<p>The clearest, and most current explanation I've found is from my link above-- which reports recent (weeks old) clarification from the DOE on this point:</p>
<hr>
<p>Now as a result of a clarification by the Department of Education, we can report more good news. For the purposes of the 2007-2008 as well as the 2006-2007 versions of the federal FAFSA form, student-owned 529s and Coverdells need NOT be reported as part of the student's assets provided the student is required to report parental information on the FAFSA. (Independent students will continue to need to report the value of any student-owned 529s or Coverdells on the FAFSA form as part of their assets.)</p>
<p>Keep in the mind that this treatment is only a policy interpretation by the U.S. Department of Education. Congress may still make changes in future year. So parents with dependent children should still be cautious about immediately transferring in custodial accounts (UGMAs or UTMAs) directly into a custodial 529 plan or designating that a Coverdell will be owned by the student upon reaching the age of majority—as this strategy to shelter these assets could backfire if Congress makes a technical correction to the law or enacts new legislation addressing this issue.</p>
<p>For the purposes of the 2007-2008 PROFILE form (which many private colleges require in order to award their own financial aid), the rules will be a little different. For students who must report parental information on the PROFILE form, student-owned 529 plans and Coverdells should be reported on the 2007-2008 PROFILE as part of the parent assets reported for PROFILE question PA-120. This means that instead of being assessed at the student rate of 25%, these funds can be assessed by no more than 5%.</p>
<p>These rules apply only to student-owned accounts of dependent students. If a parent owns the account with the student listed as a beneficiary, it continues to be a parental asset for the purposes of both the FAFSA and the PROFILE form. Be aware that student-owned 529 plans are not that common and are normally created when funds in a regular custodial account (UGMA or UTMA) are withdrawn and deposited directly into the 529 plan. However 529s can also be established as custodial 529s when the plan is originally funded, though such accounts somewhat defeat the purpose of using a 529 plan. Since the student gains control of the custodial 529 upon reaching the age of majority, there is no guarantee the funds will be used for education. Coverdell accounts may or may not become student-owned when the student reaches the age of majority, depending on how the account was originally established.</p>
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<p>True, sblake, the issue is reporting. What you quoted from the link above speaks only about 529 funds The question I answered was about UTMA accounts, which are different than 529 funds. In fact, the quote above says that "student-owned 529 plans are not that common and are normally created when funds in a regular custodial account (UGMA or UTMA) are withdrawn." So it appears that a student-owned account, if not a 529, must be reported as a student asset.</p>
<p>OK-- but the whole thread, and orjr's question preceding yours, was specifically about 529's, which are treated uniquely for financial aid purposes. And their treatment just changed this last year, which is why there is so much confusion. They are the exception to the rule, in terms of reporting student assets.</p>
<p>Actually, guys, my question really is about UTMA. To be succinct, my question is: Where does the amt. in an UTMA go for a dependent student on the profile and on the FAFSA?
The answer to the question for 529 seems clear - parent asset in almost all normal cases. BUT for the UTMA, it appears that it is a parent asset on the FAFSA (as it is mentioned specifically by name in the directions) and a student asset on the profile (due to the student being the owner of the account). This seems to be the info. I'm getting, however it seems weird ---- is it correct??</p>
<p>Oops-- I stand corrected, Chevda's answer was on point. They're student assets, should be reported that way on both FAFSA and Profile. Where are you being told that they're reported as parental assets on Profile?</p>
<p>(I just checked my reference-- no difference in reporting/treatment of these assets between FAFSA and Profile).</p>
<p>orjr - the following is a quote from this web site:
<a href="http://studentaid.ed.gov/students/publications/completing_fafsa/2007_2008/ques5-5.html%5B/url%5D">http://studentaid.ed.gov/students/publications/completing_fafsa/2007_2008/ques5-5.html</a></p>
<p>
[quote]
88. Net worth of investments. Net worth means current value minus debt. Investments include real estate such as rental property, land, and second or summer homes. Do not include your parents' primary home. Include the value of portions of multifamily dwellings that you own, except that you must exclude the portion of the value of a dwelling that is your parents' principal residence. Investments also include trust funds, Uniform Transfers to Minors Act (UTMA)/Uniform Gifts to Minors Act (UGMA) Custodial Accounts, money market funds, mutual funds,
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<p>Might whether the account is still 'custodial' or has passed into the control of the child make a difference?</p>
<p>sblake -
What I'm trying to say is the opposite. On the profile, it appears clear that a UTMA should be reported as a student asset, because the own the acct.
On the FAFSA however, the directions for the parent asset information section say: "investments include real estate, trust funds, UGMA and UTMA accounts, money market funds,...." this is for Q.88 SO - it appears to me that the FAFSA directions themselves tell me to put the UTMA as a parent asset.
That is why I am confused.</p>
<p>orjr - we were posting at the same time so I am posting to have you read my post #13 above</p>
<p>swimcats -
I thought the same thing, but our financial advisor today said that made no difference. Of course this same guy DID NOT KNOW the answer to whether it is a student or parent asset for the purpose of the FAFSA --- so no help, which is why I'm turning to perfect strangers on my well-loved message board - LOL
Ya'll are way more fun to chat with, too!</p>
<p>OK-- I see. Yeah, it's confusing. But the instructions you're looking at are just defining "investments" in general, not making a statement about ownership.</p>
<p>If you look at the instructions for the comparable question for Student Assets (Q44), it's word-for-word the same: "..Investments also include trust funds, Uniform Transfers to Minors Act (UTMA)/Uniform Gifts to Minors Act (UGMA) Custodial Accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds,.."</p>
<p>They're reportable student assets. Unless you roll them into 529's. :)</p>
<p><a href="http://www.finaid.org/savings/ugma.phtml%5B/url%5D">http://www.finaid.org/savings/ugma.phtml</a></p>
<p>Pretty much says what sblake has said - it is a student asset for FAFSA. But I was going to ask the same thing - can you transfer it to a 529 account?</p>
<p>Thanks sblake and others - that makes much more sense, although not as financially advantageous for us. Rolling over isn't necessarily the best plan either, as then taxes must be paid and it would take 2 weeks to complete the rollover.
Guess I'll have to take the EFC the way it is. It could certainly be alot worse!</p>
<p>swimcats - THAT question, I DO know the answer to: You CAN roll it over and the capital gains tax is paid by the student owner of the asset. With our investment company, they said the rollover would take 2 weeks to complete.</p>
<p>What I don't know is if there is a "look back" kind of feature for the FAFSA or the Profile. </p>
<p>I know it is a snapshot as of the day you file -- so if I wait 2 weeks to file after a rollover, and pay the taxes, is it still a positive?? The answer is probably different for each of us.</p>