While the child is a minor, the money can be used for education or other purposes that benefit the child—except for those expenses (such as food, clothing, and housing) that a parent is legally obligated to provide.
Earnings on UGMA or UTMA assets that are not held in 529 accounts are taxed at the beneficiary's rate. Moving UGMA or UTMA assets into a 529 account allows you to take advantage of the federal tax-free treatment of earnings used for qualified higher education expenses. However, there are potential disadvantages to moving UGMA or UTMA assets into a 529 account.
529 plans accept cash contributions only, so you can't transfer securities held in an UGMA or UTMA account directly to a 529 account. The securities would have to be sold, which could result in a tax liability.
All assets in a 529 account that contains UGMA or UTMA assets will be subject to UGMA/UTMA restrictions. For example, because UGMA and UTMA assets belong to the minor, the new 529 account must be used solely for that minor's benefit. You may not change the beneficiary of the account, and the beneficiary must receive control of the 529 account at the age of majority specified by the law of the state governing the account. To avoid this problem, you may want to open another (non-UGMA/UTMA) 529 account for the same beneficiary and contribute money to that account.
IF UTMA values are moved to 529 plan, then CHANGE OF OWNERSHIP form must be completed when Genny turns 21.
VIRGINIA, UTMA is up to age 21\
Liquidating UTMA now requires paying taxes on capital gains - first $850 is tax-free, next $850 is taxed at child's rate - 10%.
SERIES EE Bonds issued after 12/31/1989
http://www.publicdebt.treas.gov/
Virginia accepts UTMA's but you have to (1) CASH out the account and deposit CASH, noting so on the application. (2) must keep the money separate!!! Don't add to this 529 account once done, open another!
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.