Should Parents Transfer College Savings from an UTMA Account to a 529 Plan?
My twin daughters will be entering college in the fall. We have saved for their college education over the last 17 years. Presently the savings are held in two accounts each: a custodial account under the Uniform Transfer to Minor Act (UTMA) and in a Coverdell Education IRA account. I recently read that in connection with evaluating any possible financial aid (and in determining the EFC) that it was beneficial for their assets to be held in a Section 529 plan rather than a custodial UTMA account. Is this true? Since these funds are truly their assets (as a result of previous gifts from ourselves and other family members) can I, as the custodian of these accounts, transfer their funds to a Section 529 plan in each of their respective names? Or does it remain a custodial account until they are 18? Is it worthwhile to make this transfer? How much difference will it make in the calculation of the EFC if the assets are held in a 529 plan versus a custodial savings account in their name? I d
