Many families are unaware that they own an UTMA. Great grandma gifted Susie 10 shares of Exxon when she was born? Those shares will be in a brokerage account which shows Susie’s name, but in point of fact, will be an UTMA (or UGMA depending). If a parent opened an account they are more likely to remember how they titled it; if the gift showed up by a relative it attracts less attention.
@BelknapPoint you said…
“The language in the link above is referring to a situation where a parent is the custodian of a UTMA/UGMA account that is not a custodial 529 account owned by a reporting student who is considered a dependent for FAFSA purposes. For example, if the reporting student has a UTMA investment (non-529) account and the parent is the account custodian, this would be reported on FAFSA as a student asset”
This is what I said originally? Your last sentence is the whole point I was trying to make all along.
"I clearly stated in this initial reply that a 529 could be owned by the student and if that’s the case then it needs to be reported as a student asset on the FAFSA. I should have clarified that, that refers to student owned UTMAs and UGMAs.
My last sentence says I should have clarified that that refers to student owned UTMA;s and UGMA’s…that’s where I went wrong initially, not clarifying that piece an just referencing a student owned 529.
And this was your response: “You are wrong. For dependent students, student-owned 529 accounts are reported on FAFSA as a parent asset. Period”
I was referring to UTMA/UGMA all along but I can see where the confusion came in.
I reached out to my colleague and Director of Financial Aid at The MAine College of Art and we looked at the IFAP guidelines together. For those that don’t know, IFAP is the go to resource for Financial Aid administrators to go to for up to date accurate information and resources related to the administration and processing of Federal Financial Aid.
This is an excerpt regarding UTMA and UGMA reporting
“UGMA and UTMA accounts: The Uniform Gifts and Uniform Transfers to Minors Acts (UGMA and UTMA) allow the establishment of
an account for gifts of cash and financial assets for a minor without the
expense of creating a trust. Because the minor is the owner of the account, it counts as his asset on the FAFSA, not the asset of the custodian, who is often the parent”
HEre is a link to the master IFAP File, https://ifap.ed.gov/federal-student-aid-handbook/2021FSAHbkAVG?fbclid=IwAR3sjNU7n2KYHZB9z3vijx3RgdcMlhrGhgnbjf3ae9hZlEDIFtwIUL5Sia0
The whole point I was trying to make all along was that if the UGMA or UTMA is owned by the student it IS counted as a student asset.
So I was correct in my thinking around that. Apparently the semantics around this topic is what caused the issue.
I apologize for my miscommunication around this and for where things went wrong.
Sigh… not in the case of a UTMA 529 account.
Let’s try again. A custodial 529 account is a UTMA account. This particular kind of UTMA account, if owned by a student who is considered a dependent student for FAFSA purposes, should be reported on FAFSA as a parent asset. Is that clear enough?
Note that either UTMA or UGMA can be used, depending on what state has jurisdiction over the account (UTMA is an updated version of UGMA and has been adopted by most states). For the sake of simplicity, my reference to UTMA accounts includes UGMA accounts.
@BelknapPoint I realize this which is why I was only saying UTMA and not a UTMA 529. But I see where my initial mention of the 529 played into all this confusion. Thank you for wanting to make sure everyone understands this clearly as it is a bit of a confusing topic.
This is like saying “I was only talking about vegetables and not carrots.”