Parents with Experience Using Trust Account (UTMA)

Paying for College
1

Hello: my first child was born before the 529 plans became popular. As a result, we funded a small amount of money into a Uniform Transfer to Minors Account (UTMA). I haven’t checked it in years, and was quite surprised how much the fund has grown into. It is enough to cover probably half a year of tuition.

Are there any parents out there with experience in using this type of account to fund education? We also have a bunch of money in standard 529 accounts. Is it best that I spend first against the UTMA and then use up the 529 money? Any advice would be appreciated.

2

One of many options: Convert the UTMA to UTMA 529. See http://www.savingforcollege.com/articles/ugma-utma-conversions-to-529

3

it depends if you want to possibly get any aid. The UTMA is considered assets of your kid while the 529 is your asset. Schools expect more of the kid’s assets to be used for school than the parents.

4

@buckeyeinmd no we are not applying for FA. Just worried about the tax implications.

5

in that case, it probably depends on your income level and your state. Putting money into a 529 reduces your taxes in some states. However, any gains in a UTMA are taxed so there is a lot to consider