Free sex video chat thola - Tax consequences of liquidating 529

The kiddie tax was expanded a few years ago from 17 and under to 18 and under, and from ages 19 to 23 for students.

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Before 529 college savings plans became a popular way to fund a college education, many families utilized traditional custodial accounts (UTMA or UGMA).

As 529 plans evolved, the definition of qualified expenses expanded, making these accounts more competitive with other savings vehicles.

The custodian’s job is to keep it safe and invest it wisely so that the minor will benefit from it someday.

UGMA and UTMA accounts are often used to pay for college, but can also be used for any expense the minor incurs—anything from basic costs of living to leisure activities like team sports.

But since their introduction more than 20 years ago, 529 plans have evolved into a competitive offering.

In 2018, 529 plan assets totaled 8.9 billion in 13.6 million accounts (College Savings Plans Network).

Tax treatment and custodial accounts A primary benefit of custodial accounts is that (up to certain limits) any income generated is not taxed or only taxed at the child’s tax rate instead of a higher tax rate.

In the past, once the child’s unearned income exceeded a certain amount, the additional income would be taxed at the parent’s (higher) tax rate.

A decision of this type is not to be made lightly as it could affect your child’s ability to pay for college.

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