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FAFSA - What to do with daughter's $12K savings account?

fishnschoolfishnschool Posts: 72Registered User Junior Member
Daughter has $12K in her savings account (under her SS#). Would moving this money into the parents savings account this week be a wise thing to do before filing the 2009 FAFSA? This move would bring the child's assets close to zero.
Post edited by fishnschool on
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Replies to: FAFSA - What to do with daughter's $12K savings account?

  • lje62lje62 Posts: 3,523Registered User Senior Member
    No, not at all . I was told that unless you kept the money in a mattress , it can't be moved to make things appear to be different than they are.
    Be honest.
  • SLUMOMSLUMOM Posts: 3,610Registered User Senior Member
    Won't your daughter have Interest Income on her 2008 Tax Return? That is a big giveaway right there, that she has assets & she received Interest Income. I would think that anybody who works in FA office would see that as a red flag & then ask what happened to this money? I'm sure other CC's who work in Financial Aid can comment.
  • archiemomarchiemom Posts: 1,603Registered User Senior Member
    That is a big giveaway right there, that she has assets
    Well, I'm not at all advocating that anyone hide assets, but this would not necessarily be true. Last summer, my son spent almost $10,000.00 of his savings earning his private pilot's license. I expect that his 2008 tax return will show both dividend income and the sale of the mutual fund shares, but he will no longer have the asset to spend on college next year.
  • vballmomvballmom Posts: 3,132Super Moderator Senior Member
    Since the savings account is in your daughter's name and under her SSN, it can only be moved to another account that's titled in the same way. You have two choices to take this money out of the FAFSA equation:

    1) spend it on something that would benefit the child (a new car?) or
    2) move it all to a child-owned 529

    Option #2 can be accomplished at any brokerage that offers 529s.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    We opened a Fidelity 529 a couple weeks ago. Took about 20 minutes online, and were able to transfer funds online. Pretty simple, no set up charges, 1/2% mgmt fee. Various plans within the 529 for investing, depending on the current age of the student (higher stock market exposure for the younger kids, very small stock market exposure for the older kids). This was our state CA plan-- lots of different state plans avail.
  • scottaascottaa Posts: 1,037Registered User Senior Member
    As long as the savings account is not a custodial account (UGMA or UTMA) you can move the money. The custodials are the types of accounts with all the restrictions on moving money. A standard savings account does not have that restriction.

    There are also all kinds of things she is going to need for college itself (computer, dorm stuff, etc). You could knock out a lot of that savings account in short order.
  • cptofthehousecptofthehouse Posts: 23,982Registered User Senior Member
    Time to spend down the account. Nothing wrong with doing that.
  • vballmomvballmom Posts: 3,132Super Moderator Senior Member
    As long as the savings account is not a custodial account (UGMA or UTMA) you can move the money.

    Not true, it's very easy to move money from a UGMA to a child-owned UGMA/529, as long as we're talking about the same child, of course. I did the same thing as sblake; opened a child-owned UGMA/529 for both sons, and transferred cash from both of their UGMAs into the UGMA/529s. Everything was at Fidelity since Fidelity manages the plan for California, but any brokerage that offers 529s can do this.

    I agree that custodial (UGMA) accounts have restrictions, but transferring to a like-titled 529 account isn't one of them.
  • hmom5hmom5 Posts: 10,882- Senior Member
    Isn't the child allowed to gift up to $12K?
  • somemomsomemom Posts: 9,188Registered User Senior Member
    By any chance is it a joint account, in your name too and your SS#? If it is not UGMA then it may have had to have an adult on the account, which means it could be considered your asset??
  • fishnschoolfishnschool Posts: 72Registered User Junior Member
    My daughter's $12K savings account appears to be a UGMA type costodial account. She just turned 18 (Nov. 2008). Based on the responses so far, it seems like the best option for FAFSA treatment would be to move the money to a child-owned UGMA/529 prior to filing her FAFSA. Can I still do this now in Jan. 2009 and then flie the 2009 FAFSA (early Feb.) to gain a more favorable treatment of this asset?
  • vballmomvballmom Posts: 3,132Super Moderator Senior Member
    Yes, you can make a transfer from a UGMA to a UGMA/529 at any point prior to filing FAFSA. However, depending on the laws of your state, the UGMA might already be in the process of being converted to a non-custodial account in your daughter's name (some states do this at 18, while in others it's 21). Your brokerage firm will be able to help you with all of this.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    Our original college savings account was joint with our daughter (not a UGMA or UTMA), but in my wife's SS#. We created a 529 college savings account with me as the owner, and daughter as beneficiary. Withdrawals have to be for college (but can include room and board and misc expenses, as well as tuition). Gets reported as a parental asset on FAFSA, so gets the favorable treatment of the asset protection allowance, and the 6% assessment above that, instead of the 20% with no protection allowance.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    (fishinschool): I created and transferred ours just a day or two before filing FAFSA.
  • sblake7sblake7 Posts: 1,691Registered User Senior Member
    Here's a link to a site that compares the various state 529 plans:

    Compare 529 Savings Plans

    And here's the site that acts as a portal to California's 529 plans (called Scholarshare and run by Fidelity):

    California 529 Plan (Scholarshare)

    There's a link at the bottom to set up the 529 online.

    You'll have a choice between managed (more expensive) and index (the equity portion of the portfolio tracks a stock index), and also an opportunity, at least in the case of the CA 529's, to select a portfolio based on risk and expected time until funds are needed.
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