<p>Concerning college matters for all 4 children, husband, although highly educated at good colleges, is just not that interested. He hasn't informed himself and I think he made a big mistake without informing me first what he was doing. He put his entire bonus into youngest son't account- his reasoning- "there wasn't much money in there".- Not our account, youngest son's account.- So, even if we remove this money immediately how will this appear when youngest son applies to those nice LAC's? Any suggestions? Thank you.</p>
<p>BHG, I'm not an accountant and know the tax laws only vaguely. So with that disclaimer, I have to say that we did the same thing once and my son had a custodian account with me. The only thing we could do is transfer the custodian account into a Plan 529 account for New Jersey for my son. That's what I remember. There are a lot of accountants and tax people on this board and they can help you. My general impression is that, once it is transferred to your son, it cannot be transferred back to the parents except into a Plan 529 for his education.</p>
<p>But on the other hand, FAFSA is the family's ability to pay. You should go to a FAFSA calculator website and calculate your EFC. I think with having other children in college will help lower your EFC (Expected Family Contribution).</p>
<p>How old is you son? If he is not up for college in the next couple of years, you can legitimately spend down the account for any expenses attributable to him, and that is a very broad category. Also he if his account is not on the radar screen for colleges, he money can be gifted back unless it is in some restricted account. If he is going to college this year and that amount is in within the look back time, it is possible that he will be hit up 35% of it for the first year, but you can use that money for all expenses pertaining to him. Spend it down first before touching a dime of household money.</p>
<p>Jamimom, are you sure it can be gifted back?</p>
<p>Is it 35%<br>
Thank you Achat. Do youu know what the max to transfer in to a 529 may be ?
Will look into this with accountant but it's a delicate matter. Jamimom do we need receipts if we spend it down in the year that will be used to calculate aid, grant, what have you?.</p>
<p>BHG:</p>
<p>suggest you obtain tax counsel from someone who undersands gift taxes and college financing well (few CPAs are knowledgeable about the latter). Depending on the timing, and account structure, perhaps a legitimate case can be made for a reversal. Not likely, but worth it to inquire.</p>
<p>Jammimom is correct. If this is your son's base year (he'd be a jr), then you can legally spend it down now before Dec 31, when the FAFSA balances are reported. But, the feds take a dim view of spending it down for normal parental responsibilities such as food and clothing. However, using the funds for a new car or summer academic college program......</p>
<p>Shouldn't have posted. I 'll talk to accountant.</p>
<p>And need receipts? Like also car in student's name?</p>
<p>Yep, sounds like a boo boo to me. If youngest son's account is a UGMA account that money can only be used for the child's benefit. You can't take it back, but I don't know how they police that stuff. Not only does money in the kid's name get counted towards your family contribution at a higher rate, but the money comes under the kid's control at age 18 (or in some states by age 21), and who wants to fight that battle? (The battle I am referring to is the one where the kid wants to use HIS money in his account to finance a trip around the world)</p>
<p>I am even becoming a bit cautious on the 529 plans. It could end up being a real pain down the road if those accounts are overfunded. All future college savings will stay in my name but may go into a segregated account.</p>
<p>BHG, the yearly limit for Plan 529 is very high - like in the hundreds of thousands. Here is a website that has an FAQ. But a Plan 529 is reportable as far as FAFSA is concerned, I think; it does not help at all in decreasing your EFC. </p>
<p>Not entirely, but we have switched money back and forth from kids' accounts for years with impunity. Unless it is a special account, I don't see any reason a kid cannot give money to anyone within gift rules. My kids have given me money a number of times. How the heck can that be illegal unless it is a special account set up so there are restrictions? Anyone can give anyone else money for any reason. The problem is if it is within the one year point when colleges look at the student's account. At that time, there would have to be a reason for the transfer. But considering that the money can be legitimately used for the kid's expenses and considering how much my kids cost me, unless it was an outrageously large amount, I don't see any problems. I am not even sure where to look up a question like this one since there really aren't restrictions except those within the type of account set up as to what a person, even a child does with his money. Also if it was a mistake, you can always take the money out. Mistakes happen all of the time and can certainly be corrected. The problem occurs when things like this happen during the window when the accounts are being scrutinized for financial aid purposes. I mean I once deposited a check that was supposed to be for our account in the joint account I hold with my mother. Wasn't thinking and just used my deposit slip as I was doing several things at the same time. Didn't notice and just handed it to the teller, and the check ended up in the family account instead of this ancillary account, and I did not notice for a couple of months and really only when my mother asked about it in a phone conversation. I just apologized and wrote her a check from the family account and this time deposited it properly. I accidently sent the checks to one school to another one when we had kids in about 4 different private schools and I was stuffing envelopes and paying bills. And you know what--they were able to cash that check!! I used a remittance form for the tuition, so the clerk did not even look at who the check was for--just corrected the amount, and deposited it along with all of its other payments. The bank did not look at who the check was made out to. Both schools had the word school in their name, and I guess the banker's eyes just skimmed over the actual name. The other school did catch the mistake--otherwise I would have gone nuts. It was a pain correcting the problem as it was. I mean, why can't someone just give back money inadvertantly put into the account, even within family unless there were some other things involved like if was an IRA contribution or a special account with "bear trap" features in taking money out?</p>
<p>That has happened to us too! one place cashing a check with another name on it !
I'm not even sure if maybe I'm fretting about something which would not make that much difference anyway. But I certainly don't want to end up fined for something that I had no idea was wrong or against the law!
Yeah, this is within the 1 year period. It seemed to me with the older kids if you have any money at all in a kid's account that must go for the tuition- or so the colleges think-and it's pretty cut and dry concerning aid.</p>
<p>BHG, I think Jamimom's advice is the best. I don't have that much experience in the matter. And spending it down for your son's expenses would be the best thing to do.</p>
<p>You had extra money and it might be used for your son's education, it was an accounting mistake that might cost you some money....The money the school saves on grants to your child will probably end up allowing someone else (whose parents didn't get a bonus) to afford an education. An accountant might tell you how much the mistake is costing you, but they won't be able to describe the benefit the other student(s) get.</p>
<p>Mr B; So true, but we didn't have extra money. H and I have no personal savings, - retirement separate, not included.</p>
<p>I don't know how big of a problem this is, or if you could treat it like a loan and have it paid back from his account to yours. I am not even sure why you can't just take it from his account back into yours anyways, since is was a mistake. Money deposited into the wrong account.</p>
<p>Okay.........., thank you........., I'll discuss this with H. and look into it. This all just happened last week, the check sent last week, so I was thinking this could possibly be an option . H and I have to discuss first. Just posting this thread has made me seriously think about it, so posting was good to do.
All this bit about savings anyway, we saved for all 4 kids and we paid for college for 1 and 1/2 and we have everything there for #3 and saving for #4. But if say, our roof went we would have to take out a loan. We can short term save for like a vacuum cleaner or a college trip but if it comes to $1,000 into the college account it goes. Sorry to talk about these things but who knows me here, or cares, so if I seriously made a move to correct it and discuss it- so the posting was progress.So thank you all.</p>
<p>I am not here to give financial advice. I am not allowed to, nor am I qualified. But I do know that what is "logical" and what is required by rules and laws are often two very different things. You can often easily "get away with" things that you can live with because the actions are logical, seem ethical and harm noone, and the chances of getting caught are nil. An accountant should tell you what the law requires, not what you can most likely get away with. </p>
<p>Any discussion of UGMA rules usually includes a warning about the potential adverse effect on financial aid. Here is a small exerpt:</p>
<p>
[quote]
The following is a summary of the key UGMA drawbacks:</p>
<pre><code>* The Uniform Gift to Minors Act specifically provides that once money is transferred to the account, the donor can not take it back.
[/quote]
</code></pre>
<p>However, if your student is 17 and needs a car to go to work then you may withdraw for the car. Or for braces, or if you need to charge your child for room and board.You could take out money for a pizza for the child if you needed to. What I want to know is do you need to save the receipts for that pizza or car or braces?</p>