<p>Thanks everyone for the input, I’ve been reading replies and having to google lots of terms!</p>
<p>I never knew about UGMAs and do wonder whether they’re for us and how far down the financial aid route we’re going. Can anyone explain the second paragraph from a page on UGMAs? I’ve been trying to understand how they work.
*Those eligible for financial aid may actually not benefit from a establishing a UGMA. Colleges and financial scholarships generally assume that 35% of assets in a child’s name be used to pay tuition before calculating any award of financial need. This figure is approximately 6% of assets for parents’ assets. Hence, any tax savings could be significantly offset by the loss of financial aid given by the school.</p>
<p>To combat this financial aid conflict, many parents sent up UGMA accounts and then plan on using the assets for the benefit of the child prior to completing financial aid forms; hence, they receive the tax benefit and avoid losing financial aid.*
[What</a> are the pros and cons of a UGMA account?](<a href=“http://www.the-adviser.com/Money/ugmaacc.htm]What”>What are the pros and cons of a UGMA account?)</p>
<p>As for funding our retirement before the kids’ college funds, we’re currently putting much bigger contributions into retirement accounts, at least 3x as much as into the kids’ funds. H does have a defined benefit plan (another term I had to google) after many years of misery as a public sector employee. I’m also public sector but haven’t been in as long so it’s mostly my contributions (with some employer contributions, I need to find out how much they’re contributing and look at my allocations) We’re both having money withheld into 403B accounts (public sector equivalent of 401K) and we’re actually making the maximum contributions to our IRAs so any additional money would get put into 403Bs. </p>
<p>So that really changes my question to one about tax and FAFSA impact of 403B vs 529, not IRA vs 529. And the more I read the more I think that 403Bs are even more complicated to me than IRAs.</p>