<p>we have a utma custodial acct for my child and was told by our account manager that we could transfer the funds to a 529 account without liquidating the utma account first. Everything I've read so far indicates we need to liquidate first since only cash can be used to fund the 529. Has anyone done a transfer from a utma to a 529. Currently the utma is fully invested in a mutual fund. the company is Waddell and Reed.</p>
<p>Are you sure they’re not referring to a direct rollover from another qualified plan?</p>
<p>I took a look at the doc and didn’t see anything about a rollover from a UTMA. I also didn’t see anything about contributions needing to be in cash, but that’s how my 529s have always worked (Fidelity and TIAA-CREF). I transferred from UTMAs to UTMA/529s and had to liquidate first. If you don’t liquidate first, you’d be sheltering any capital gains within a tax-free account - a nice idea, but I’m not sure it’s legit.</p>
<p>The fees look pretty steep in this plan. Is it your only option?</p>
<p>[Waddell</a> & Reed - Ivy Funds InvestEd 529 Plan](<a href=“http://www.waddell.com/personal_investors/products_education_invested.aspx]Waddell”>http://www.waddell.com/personal_investors/products_education_invested.aspx)</p>
<p>I had an UTMA for my s with Fidelity and in order to “transfer” the funds into a custodial 529 plan I was required to liquidate the funds first, and I received tax docs, as there was tax due on proceeds.</p>
<p>thank you vballmom. my account mgr called back and indicated the funds in the utma account has to be liquidated first. you were right.</p>
<p>How old is child? Probably worth paying the taxes now, 529 will save you about 15% in FAFSA amount. If your FAFSA EFC is enormous either way, then it really doesn’t matter what you do,work on good merit opportunities.</p>