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Milerose
MY BABY!
Member since 9/06 4161 total posts
Name:
R
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529 or IRA
Hello I am looking to open one of the followong for my son. My issue with the 529 is that he is an only child and I worry if he dosent go to college etc... I will then be taxed tremendously on that money. Any suggestions are most appreciated. I have a financial advisor but i like to see what others do as well lol. TIA
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Posted 5/17/17 11:03 AM  |
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Long Island Weddings
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MrsB612
LIF Adolescent
Member since 12/12 784 total posts
Name:
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529 or IRA
For that same reason I didn't open a 529 account for DS. My FA suggested I open an UTMA account instead. He can use that money for anything he wants once he turns 18 I think.
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| Posted 5/17/17 11:17 AM |
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Milerose
MY BABY!
Member since 9/06 4161 total posts
Name:
R
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Re: 529 or IRA
Thank you mine suggested the UTMA as well.
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| Posted 5/17/17 11:26 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: 529 or IRA
Well, unless he has income, you can't open an IRA. You need to have earned income to contribute to that.
An UGMA or UTMA account would be his and his alone. He will have complete access to the money when he hits the age of majority and can do with it what he wants. He will also need to file taxes should there be gains and or divs. Additionally, 100% of anything in an UGMA/UTMA account is taken into account when filing for financial aid whereas monies in your name - only a percentage is.
Those are just some things to consider.
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| Posted 5/17/17 1:53 PM |
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Milerose
MY BABY!
Member since 9/06 4161 total posts
Name:
R
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529 or IRA
Thank you. They also consider a 529 when looking for financial aid etc... right? This is all so confusing lol
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| Posted 5/17/17 2:26 PM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: 529 or IRA
Posted by Milerose
Thank you. They also consider a 529 when looking for financial aid etc... right? This is all so confusing lol
Yes they will but if your son is only the beneficiary of the 529; not the owner, only a certain percentage is considered. If he is the owner, then the entire balance is considered. Typically, only the earnings portion of a non qualified withdrawal is subject to a penalty and there are exceptions to the rule.
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| Posted 5/17/17 3:53 PM |
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Milerose
MY BABY!
Member since 9/06 4161 total posts
Name:
R
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Re: 529 or IRA
Posted by CookiePuss
Posted by Milerose
Thank you. They also consider a 529 when looking for financial aid etc... right? This is all so confusing lol
Yes they will but if your son is only the beneficiary of the 529; not the owner, only a certain percentage is considered. If he is the owner, then the entire balance is considered. Typically, only the earnings portion of a non qualified withdrawal is subject to a penalty and there are exceptions to the rule.
Thank you I was told I can always transfer the money from the UTMA to a 529 say in 5 years if I decided to. My son is 4 years old and he is my only child so that is why I am having a hard time deciding what to do. I am also a single parent so....
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| Posted 5/22/17 1:32 PM |
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Milerose
MY BABY!
Member since 9/06 4161 total posts
Name:
R
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529 or IRA
I think I have decided to open up both a 529 and an UTMA. If worse case scenario he dosent use 529 I can pull the money out and pay the taxes on it. Thanks so much everyone.
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| Posted 5/23/17 8:58 AM |
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529 or IRA
I have custodial investment accounts open through New York life. Every week we have an auto deposit go in as do my parents. I have to check how the account is actually set up but I do know there's no tax on the money each year and they can withdraw without penalty at anytime
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| Posted 5/23/17 9:56 AM |
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