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<p>All 529s are assessed at the parent rate of 5.6% for FAFSA, whether owned by the child or the parent.</p>
<p>Not all Profile college request information about cars, in fact most don’t. It’s not clear how those that do request that information use it.</p>
<p>This poster is looking for legit ways to use this money for her kiddo. My impression from the post was that the money will be used for college and related expenses IF there are no ways to use it otherwise. </p>
<p>To the OP…read the post upstream about 529 accounts. You might want to consider this.</p>
<p>Isn’t one issue that, in 2012, he does have 50k in assets? So, even selling the fund now doesn’t erase that visibility-?</p>
<p>For anyone who hasn’t see it, this is a piece about maximizing aid eligibility. In parts, it discusses student assets.</p>
<p>I don’t think we know if OP will be heavily dependent on financial aid or just wants a sane plan. Also, I have always been under the same impression that cars are viewed as assets- this article says no. </p>
<p>[FinAid</a> | Financial Aid Applications | Maximizing Your Aid Eligibility](<a href=“Your Guide for College Financial Aid - Finaid”>Maximizing Your Aid Eligibility - Finaid)</p>
<p>Though the copyright footnote says 2012, I honestly don’t know how current/updated is. I first found the page years ago and parts of it look like it hasn’t been touched in a while. But, it discusses “legitimate.” About half way down the page, there’s a chart showing student vs parent examples.</p>
<p>“Before you do anything, run the numbers to calculate your EFC to see if the $7200 increase will make a difference.”</p>
<p>I’d do this FIRST. It may turn out that that your EFC is already >COA, even without the UTMA “problem.”</p>
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<p>What’s reported is the amount of student and parent assets on the date FAFSA is filed, which in this case will be January or February 2013. What happens to any money between now and then is irrelevant. If Profile needs to be filed early, for EA or ED schools for example, then the asset amount might be reported for Profile differently than for FAFSA.</p>
<p>That FinAid.org link is slightly out of date with regards to the treatment of student-owned 529s. The loophole was closed several years ago; student-owned 529s must be reported. Prior to 2008 or so they were not reported on the FAFSA form.</p>
<p>Otherwise the general information in the link is correct for FAFSA. It’s not 100% accurate for Profile schools because sibling and grandparent-owned 529s are reported there, along with (sometimes) family-owned cars.</p>
<p>I believe lookingforward was confusing income with assets. FAFSA and Profile income numbers are based on the prior tax year, so any income to the student this year will be visible on next year’s forms. However assets on these forms are simply snapshots taken at the moment of filing. What happens to the assets before or after filing is irrelevant (insofar as transfers between accounts do not trigger income events).</p>
<p>If the 50K is mostly capital gains, which is likely the case for a stock held 18 years, keep in mind that you will need to pay 15% of the gains in taxes for the year you liquidate the stock. The rate may rise to 20% in 2013. You’ll probably want to pay the taxes out of the account before the asset is evaluated by the granting agencies.</p>
<p>^ I was forgetting the filing date issue for assets. And thinking that if there are annual gains past a certain level, someone is reporting these on tax forms. At this point, I’ll back off.</p>
<p>OP here. Thanks again for all this great advice. For others who are following this thread due to similar situations, do what I did today (and was advised to do by several posters) – run the calculator on the finaid.org site!</p>
<p>Investing my son’s UTMA account funds in a 529 makes a lot of financial sense; in fact, it reduced the EFC by nearly $10,000 for the first year of college. Unfortunately, to invest all of the $50,000 means liquidating the account (529s must be funded with cash). That’s a big step and I’m feeling pretty cautious about it. I would be more comfortable selling a portion of the UTMA. Also, liquidating the account would assign my son a substantial capital gain as this account is 18 years old.</p>
<p>There are many unknowns, of course. He could earn a merit scholarship – at several of the schools he’s considering, he’s a very good candidate for this. Conversely, a school could look at our EFT and offer loans instead of grants. It would be unfortunate to sell off income-generating stock, pay capital gains tax, and then be offered a loan. (Not eligible for Pell, never was.)</p>
<p>What about using the UTMA funds to purchase a car? I think we’ll revisit that idea in a couple of years. </p>
<p>One unexpected surprise in running the calculator was discovering that the family size makes such a difference. Also living under my roof is a recent college grad (son’s sibling) who is doing an unpaid internship and also working part-time. When I add this young adult to family size, it reduced the EFC by almost $2,000. I hope this college grad “launches” before I do the FAFSA, but if I continue to support this young adult as I am now, I can add one dependent to family size. (Must provide 50 percent of support to do this.)</p>
<p>A question – if we use 529 funds for the first year of college, is that amount reported as unearned income for the student in the subsequent year’s FAFSA?</p>
<p>Thanks again to all who have spent time on this thread!</p>
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Have you taken into account that, “the tax kicks in only when your childs investment income exceeds $1,900. The first $950 reported on your return is tax free, the second $950 is taxed at the childs rate.” If you liquidate some this year and another portion at the beginning of next year before filing FASFA. You son would have 2<em>$950 tax free and 2</em>950 at the child’s rate.
<a href=“Redirect Notice”>Redirect Notice;
<p>This works much better as a junior than a senior, but I have seen numerous people in the same situation have the UTMA account gift back $13,000 of assets to each parent each year. Not sure the in’s and out’s of this, but does seem to make sense as then the parents can use for the parental contribution. Nothing unethical in this and you can do without selling the assets.</p>
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<p>No, withdrawals from a 529 are not considered income.</p>
<p>Transfers to minors in UTMAs are irrevocable. Custodians of UTMAs have a fiduciary duty to spend any funds for the benefit of the student. Gifting that money to the parent does not fall under that category and is in fact unethical. Spending the money on college is both legal and ethical. In reality the IRS rarely goes after custodians who raid UTMAs, but there are occasional lawsuits filed by minors.</p>
<p>[The</a> Minor’s Right to the Money](<a href=“http://www.fairmark.com/custacct/minorsright.htm]The”>http://www.fairmark.com/custacct/minorsright.htm)</p>
<p>And, be aware that the Finaid calculator is not a perfect representation- it’s a guide. Many families see their college EFC come in higher, some say +25-35%. Closer is to use a college’s own NPC on their finaid website. And, the aid you actually receive is dependent on that college’s policies, how they view your own pattern of financial strengths and how generous they are.</p>