[Jennifer]

Proc/cons for UTMA vs 529 for minors? I’m debating if there’s a big benefit to 529 when we are in Texas and don’t get a break on a state tax. I’m not sure if college is in the cards.

My kids each do have earned income and Roth IRA accounts so the idea that it could eventually be rolled over into that is nice, but am I correct in understanding that UTMA could be access earlier for a business/home where 529 $ could not without a penalty?

We do homeschool off and on and I just learned it can be used for k-12 as well which would be nice.

And last question… for those of you with 529 do you set a different one for each kid, or roll it over if one winds up not needing it?

[Karen]

If I’m not mistaken, an UTMA is your child’s account. As in, it’s no longer your money, it’s under your guardianship and becomes theirs at the age you set depending on local state laws. 529 is YOUR money.

You can pull the principal and use it for anything, but if the funds end up not being used for education related fees, the growth will be taxed as income and penalized.

I have an only child, so I can’t speak to your last question. Since most 529s are age based and self adjust risk based on that, I’d suggest opening one for each kid.

Any funds not used can be repurposed to anyone else – another child of yours, a favorite nibling, etc.

[Elizabeth]

I went with 529s for each of my kids. Besides the Roth transfer option, you can change the beneficiary to a different family member or even yourself if you go back to school.

[Matt]

529s are an incredibly low priority, as is UTMA. Invest with a focus on your OWN retirement, so you’re not a burden to them, and fund their goals only after yours are assured to happen.

529s and other “Future Expenses”, like setting kids up with unearned money.

[Frank]

Sounds like a false dilemma. Why don’t you just keep it in an account in your own name and decide later when and if you want to give it to them?

But of the two, 529s are far more flexible and controllable, as you can change the beneficiary on them and control all the distributions.

[Author]

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