Can I transfer my childs Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account into a 529 plan?
It depends on the terms of the plan. Many plans accept funds from an UGMA or UTMA account, but some do not. Check with the plans in which you’re considering investing. 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 t
Related Questions
- Can I transfer UGMA (Uniform Gifts to Minors Act)/UTMA (Uniform Transfers to Minors Act) accounts into a College Savings Program?
- Can I transfer my childs Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account into a 529 plan?
- Can I transfer my childs existing Uniform Transfers to Minors Act (UTMA) account into a 529 plan?
