Well, yes, if you need to file FAFSA tomorrow or your MIL is uncooperative. If you have a few days and your MIL is willing, opening a custodial 529 can be done online in a matter of minutes.
Do you think it could be at the same company and with the same funds? Just a transfer? Would that be “income” before it’s reinvested?
@BelknapPoint - apparently Janus doesn’t offer a 529 (?) just the Coverdell (I didn’t know that still existed) and the UTMA, both minor assets.
Yes, it could be, as long as the company offers custodial 529 accounts. The UTMA would have to be liquidated and the money then put in the custodial 529. There may be capital gains that might be taxable (depends on your son’s other income), but that would be a 2016 event and would not be reported on the FAFSA that you are working on now. In fact, if there is a capital gain, it wouldn’t be a factor on FAFSA until two years from now, because next year’s FAFSA will also use 2015 income information.
@BelknapPoint - very helpful points, especially the FAFSA being based on 2015 for next year too (I did not know that!) - but alas Janus, where the fund is, does not offer 529 plans, I have no idea why. However, it might explain why my MIL didn’t use a 529 in the first place, because I know she wanted a particular fund.
If it would be worth it to wait and it sounds like it, especially with the UTMA account, then I would wait.
Your son will have his assets counted towards EFC without an APA and at 20%.
Does anyone know if the asset conversion rate for parents has changed? I thought it was 5.6% but the 2016-17 EFC formula has parent asset conversion rate listed as .12, so 12%?
If you have checks for bills you’ve paid that are clearing in the next day or so, then I think it is fine that you deduct those from your balance because if you are questioned, you can show that your records show the money was spent. You aren’t going to stop payment on them, the funds are committed, you just have no control on when the checks are submitted through your account.
However, you said you have post dated check through the end of the quarter. Those aren’t really funds that are on their way out the door. You can stop payment on those checks, close the account, you’ll have many paychecks and deposits in and out before the end of March. Those funds I think you have to report. If the day care cashed the funds, and you had a credit, that would be a different story. It is permitted to pay obligations ahead and deplete your assets on hand, but in this case you still have the money.
It’s really up to you to determine if you still have control over that money.