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trek24: "I am considering whether to transfer some college savings assets from one type of account (a Uniform Gift to Minors Act account) to another (a 529 account), and I would appreciate any advice."

It can be done.

"Background: Our oldest son is 5 years away from starting college. We have a 529 account already established in his name (with me as the owner). I also hold (as the custodian)a UGMA account, which is invested in municipal bonds. There are several reasons that I am considering moving the funds to a 529 account.

1. In my state, I am able to deduct up to $4k per year from state income tax (which is at 6%) for contributions to the 529. (This only matters if I'm not otherwise contributing $4k per year to the 529 plan, so is really a small consideration.)"


The UGMA money is already your son's, so you are not making a contribution and there is no deduction for you.

"2. The 529 has an index fund that I would prefer to be in, rather than the municipal bonds. (I know, I've considered the additional risk associated with this.)"

You can invest the UGMA in an index fund instead of muni bonds without a 529 plan.

"3. Do the different types of accounts matter when filing for financial aid? That is, would the financial aid assessment look at funds in a 529 account differently than funds in a UGMA account?"

Yes, but the UGMA money is already your son's money and still wioll be his money after you move it around.

Regards, JAFO
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