<p>I apologoze if this has been posted already- </p>
<p>see below- it is possible that if this change is approved that many Financial Planners will advise their clients to convert their UGMA accounts and other assets in the child's name to their 529 plan.....see below:</p>
<p>Bush proposal would make 529 plans more attractive </p>
<p>President Bushs proposed 2008 budget contains a change that would make 529 plans more attractive as a way to save for college and as an estate planning tool.
Under the proposal, assets in a 529 account would not count at all in determining federal financial aid. They would be ignored entirely when the federal government calculates a familys expected financial contribution.
Currently, such accounts are considered, although the government typically factors in only about 5 percent to 6 percent of the assets.
This is good news for parents saving for college, but it also reinforces the fact
that 529 plans can be a good estate planning tool for parents and grandparents. Family members can contribute up to $11,000 a year to such plans tax-free, and any increase in value of the assets while in the plan is not taxed. In addition, family members can front load their contributions giving up to $55,000 right away and averaging it out to $11,000 over the next five years for tax purposes.
Family members can also retain some control over the investments, and even change the beneficiary so that if a child doesnt need the money for college, it can be left in the account to grow tax-free until it is used for a grandchild.</p>
<p>This is crazy. The federal formula is already full of iniquities. Why add one more? For example, money your company sets aside for a defined benefit retirement plan is not considered income. Money I set aside in a 401K is counted.</p>
<p>And the institutional formulas are even worse. Private school tuition for younger sibs can be deducted from income? But my property taxes that pay for the public school my kid attends can't? give me a break...</p>
<p>newmassdad- that is why many planners recommend burying funds in life insurance and annuities- no 1099's annually- yes I agree it is all crazy- but UGMA's were never in the family's best interest or the student's- We stopped recommending UGMA's back in 1990!</p>
<p>I've assumed that we would not be able to qualify for financial aid and pretty fully funded 529s. I didn't know that they gave credit for private school tuition as number 2 is/will be in private school for her last two years of high school while number 1 is in college. </p>
<p>songman, what do you do with money the kids earn or receive as gifts from people other than me? The bank and brokerage firm both seemed to need me as a signatory.</p>
<p>If the change goes through it seems that you could deposit those checks into the 529 plan no? But if you have a significant amount in the students name and ownership ,you need to seek the advice of a college financial planner. Specific planners like divorce or college planners are few and far between but the financial planning organization could give you a name. Just like medicaid planning there are certain techniques that one can employ not to deceive the government or to hide assets but to place your assets in the proper bucket which would be compatible with the silly regulations or procedures that FAFSA or the college fin. aid office use. Sort of like zen in the art of college planning!</p>