Liquidating 529 Adult dating oxford
A decision of this type is not to be made lightly as it could affect your child’s ability to pay for college.But if money is desperately needed, parents need to be aware of the different rules and tax implications for withdrawing college funds for non-college expenses from UTMA and UGMA Custodial Accounts, Section 529 Plan Accounts, and Coverdell Education Savings Accounts.The legislation includes several new provisions related specifically to 529 plan accounts, beginning with the 2018 tax year: Please check back as we update our website to reflect these changes.For additional guidance on these new provisions, account owners should consult the Pennsylvania Department of Revenue at or by calling 717-787-8201 or consult a qualified tax advisor about your personal situation.I read online that under the new tax act of 2005 (TIPRA) that she would be better to wait until 2008 to liquidate her UTMA accounts because her capital gains rate would drop to 0% at that time (for the two lowest tax brackets). Please review advantages and disadvantages of UTMA accounts in this article - account will terminate when the minor attains age 18 unless you specify a later age.The income of a custodial account is taxed to the child.
On the other hand, UTMA account will be terminated when the minor attains age 18 and all will be transferred to the regular account.
If the money is used for “qualifying” educational expenses, the money can be withdrawn completely tax-free.
If it is not used for qualified education purposes, the portion of the distribution that represents a gain is taxed to the beneficiary (child) as income and is also subject to an additional 10 percent penalty.
The caution here is that money that is withdrawn from a Section 529 plan that is not used for higher education expenses will be subject to a 10 percent penalty and income tax on the profits.
Any underlying investments may also charge you a surrender fee.