Retirement & Financial Planning Report

An UGMA/UTMA 529 is an account in a 529 college savings plan funded with money already held in a minor’s custodial account. When the current beneficiary reaches the age of legal ownership (usually at 18 or 21, depending on the state), he or she will have the right to take control of the account.

For the current school year, your child’s UGMA/UTMA 529 does not have to be reported on the federal financial aid application (FAFSA). Thus, holding assets this way may help your family qualify for more federal aid.

Even after the current school year, the treatment of an UGMA/UTMA 529 will still be favorable. Such accounts will be reportable on the FAFSA, but not as a student asset. Instead, the money will be reported as a parental asset.

Thus, a family will be expected to use 5.64 percent of an UGMA/UTMA 529 account to pay for college (parent’s rate), not 20 percent of the account (student’s rate). The less the family is expected to pay, the more financial aid will be available. It is very rare that an asset owned by the student will be treated as a parental asset, for determining financial aid.