UTMA to 529
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Colonel_Buck
- Scalawag
- Posts: 58
- Joined: Sun Jan 22, 2006 3:13 pm
- Location: West Hills, CA
UTMA to 529
In April of 1996, I opened a UTMA account at Fidelity Investments for my #2 son who was 4 years old at the time. Over the next 10 years I added money to it and re-invested all the dividends and capital gains, reporting each on my tax return in the year they were re-invested. In 2006 I cashed out the UTMA and put the proceeds into a John Hancock 529 account. My question is: Do I owe taxes on the gross proceeds from the UTMA account or just the capital gains?
What kind of bomb was it? The exploding kind.
How can a blind man be a lookout? How can an idiot be a policeman?
But that's a priceless Steinway. Not any more.
How can a blind man be a lookout? How can an idiot be a policeman?
But that's a priceless Steinway. Not any more.
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jg
- Fed Chairman of the Quatloosian Reserve
- Posts: 614
- Joined: Wed Feb 25, 2004 1:25 am
Re: UTMA to 529
Neither. Your child owes the tax, if any, on the gain. The assets in the UTMA account are owned by the child. Income generated by assets in the account are the child's income.
Usually, the assets of a 529 plan belong to the parent, as the contributor. Unless you made the UTMA account a custodial account with the child as the owner of the 529 plan; you have a custodial duty to preserve the assets for the child even if the form of the 529 plan appears to give you ownership.
For an article on such transfers see http://www.fairmark.com/custacct/529plans.htm and especially the section "Consequences of the Transfer".
I hope this general information is useful as applied to your particular situation.
Best wishes.
Usually, the assets of a 529 plan belong to the parent, as the contributor. Unless you made the UTMA account a custodial account with the child as the owner of the 529 plan; you have a custodial duty to preserve the assets for the child even if the form of the 529 plan appears to give you ownership.
For an article on such transfers see http://www.fairmark.com/custacct/529plans.htm and especially the section "Consequences of the Transfer".
I hope this general information is useful as applied to your particular situation.
Best wishes.