<p>For a student entering college fall 2012, it would the 2011 tax year that is used for FA calculation, which would be submitted early 2012, correct? And if a UTMA custodial trust is converted to a 529 (to make it a parental asset and thus "taxed" at a lower rate for FA), does that have to be done before the 2011 tax year, or just before the FA is submitted?</p>
<p>It just has to be done before the FAFSA is filled out, typically in January of the year you file (so January 2012 in your case).</p>
<p>Can you convert an UTMA custodial account (savings account, mutual fund, etc) to a 529 to make it a parent asset? I thought I read that it has to stay as the child’s asset (titled as a child 529). I need to figure out if this is allowable. Any help/explanation is appreciated.</p>
<p>No it would have to be a 529 in the child’s name. But for FAFSA a 529 account in the student’s name is reported as a parent asset so has a lower impact (up to 5.6%) on the EFC than a student asset (20%). Other assets in the student’s name must be reported as student assets. The 529 is the exception.</p>
<p>You can convert a UTMA custodial account to a child-owned 529, also known as a custodial 529 or a UTMA/529. The account remains titled in the child’s name (which means you can’t transfer the 529 to anyone else as you could a parent-owned 529). The child-owned 529 is then assessed by FAFSA as any other 529, which means it’s assessed at the parent rate of 5.6% rather than the child’s rate of 20%.</p>
<p>Thank you for the explanation - after conversion it is assessed at the parent rate of 5.6%.</p>
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<p>Yes because you report 529s, even child-owned ones, as a parent asset on FAFSA.</p>