A UTMA account Question

notrichenough
Thu, 31 Mar 2011 12:53:31 +0000

d) a trustee-to-trustee transfer from the UTMA to a UTMA/529 owned by your son.

This also has the advantage that the 529 UTMA assets are counted as parent assets (assessed a max of 5.6% for financial aid) vs. a regular UTMA being counted as the student’s asset (assessed 20% for financial aid).

The disadvantage is that when you move the money, you have to cash out the UTMA, and if the UTMA was invested in something that has increased in value (stocks for example), that income will have to be reported as student income, and taxes will have to be paid on the earnings.

If the stock market did to your kid’s UTMA what it did to mine, this might not be a problem. :)