Which is better 529 or UTMA?
Earnings in a 529 plan are tax-free as long as you use them for qualified education expenses. By contrast, the government taxes UTMA earnings above $2,100 like income from a trust or estate. Generally speaking, funds in an UTMA are seen as the child’s assets, while 529 assets are seen as the parents’.Click to see…
Earnings in a 529 plan are tax-free as long as you use them for qualified education expenses. By contrast, the government taxes UTMA earnings above $2,100 like income from a trust or estate. Generally speaking, funds in an UTMA are seen as the child’s assets, while 529 assets are seen as the parents’.Click to see full answer. Also asked, can I convert my UTMA to a 529 plan?You can transfer the money from the UTMA or other custodial accounts to a 529 college savings plan. The custodial 529 plan will be titled the same as the UTMA account. As custodian you will not be permitted to change the beneficiary of the custodial 529 plan.Furthermore, is Utma a good idea? UGMA / UTMA accounts can be good for some things, bad for others. The main “upgrade” is greater flexibility – UGMAs only hold securities, UTMAs can hold securities and others assets, such as real estate. One may also ask, do UTMA accounts have to be used for education? While 529 plans provide for tax-free growth and distributions as long as the funds are used for educational purposes, there is no special benefit for spending money from a UTMA account on education. For most people, UTMA accounts are hassle-free until the child starts paying for college with funds from the account.What is an UTMA 529?It refers to account in a 529 plan funded with money already owned by your minor child. Another name frequently used for a 529 account opened with UGMA/UTMA money is “custodial 529 account.” Nearly all 529 savings plans have special procedures to accommodate UGMA/UTMA 529s.
