Thank you, great video was on the fence about this or 529 but you convinced me to go with UTMA because I would rather they have retirement. What if my kid decides not to go to college that’s where 529 wouldn’t benefit the family.
Are there any dates we should know about when we gift money to this account? And in the future, can my child transfer these funds to their IRA or Roth IRA?
Great video. Thanks. If you record a supplemental video it would be great if you cover how capital gains taxes are handled under kids brokerage accounts, if it’s straight forward enough to do so. Again, thanks for the helpful video. It was great.
It could be! My preferred investing order of operation for generational wealth would be: 1. 529 College Savings Plan -- this way, they can make their own money and not worry about student debt 2. Roth IRA - with their EARNED INCOME they can invest for their future retirement needs and have it grow tax-free 3. UTMA (Kids Brokerage Account) - Can use it for whatever they want when they become adults (a pro, but also a con)
Did I hear that right? If my kid gets a scholarship or goes to college for free then I can withdraw 529 money and use for non educational expenses without penalties or taxes?
Penalty-free, but there would be taxes on earnings (federal and state). Scholarships rock! New rules allow you to roll over unused 529 funds into a Roth IRA for your child as well. 529s are becoming a lot better!
Great content! One thing I’m concerned about with opening up an utma/ugma for my child is how exactly it affects their eligibility for financial aid, or by how much. Like would the gains from a brokerage outweigh the potential loss of funding from financial aid
Yes, your child’s UTMA can affect financial aid eligibility. A UTMA account is weighted at 20% when your child submits the FAFSA form. That means that students are expected to be able to use 20% of their account balance each year for school. This doesn’t have to be a deal-breaker, but it is worth noting that another college savings option-the 529 college savings plan-counts for much less on FAFSA.
I like Vanguard for this - marriagekidsandmoney.com/how-to-open-a-custodial-brokerage-account-with-vanguard/ I'll work on a video to compliment these steps above
Find out the "age of majority" in your state. At that age, the account will legally belong to your child. This transfer (of assets and knowledge) is very important to your child's future financial health. Letting them take the reigns (and showing them how) is important. For more control over when they receive money in the future, consider looking into a Trust.
Thank you, great video was on the fence about this or 529 but you convinced me to go with UTMA because I would rather they have retirement. What if my kid decides not to go to college that’s where 529 wouldn’t benefit the family.
Best wishes on your generational wealth journey!
you never left the link for the compound interest calculator for kids brokerage account
Thanks for letting me know!
Here you go: www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
Are there any dates we should know about when we gift money to this account? And in the future, can my child transfer these funds to their IRA or Roth IRA?
Thank you. The 529 sounds good
Agreed!
Great video. Thanks. If you record a supplemental video it would be great if you cover how capital gains taxes are handled under kids brokerage accounts, if it’s straight forward enough to do so. Again, thanks for the helpful video. It was great.
Good stuff bro!
Glad it was helpful!
Thank you !
Happy to hear you enjoyed watching!
Great video. Thanks
Glad you enjoyed it!
Is a Brokerage Account a good option for jump starting a Childs retirement?
It could be!
My preferred investing order of operation for generational wealth would be:
1. 529 College Savings Plan -- this way, they can make their own money and not worry about student debt
2. Roth IRA - with their EARNED INCOME they can invest for their future retirement needs and have it grow tax-free
3. UTMA (Kids Brokerage Account) - Can use it for whatever they want when they become adults (a pro, but also a con)
Great video!
Thank you so much!
Did I hear that right? If my kid gets a scholarship or goes to college for free then I can withdraw 529 money and use for non educational expenses without penalties or taxes?
Penalty-free, but there would be taxes on earnings (federal and state).
Scholarships rock!
New rules allow you to roll over unused 529 funds into a Roth IRA for your child as well.
529s are becoming a lot better!
Great content! One thing I’m concerned about with opening up an utma/ugma for my child is how exactly it affects their eligibility for financial aid, or by how much. Like would the gains from a brokerage outweigh the potential loss of funding from financial aid
Yes, your child’s UTMA can affect financial aid eligibility.
A UTMA account is weighted at 20% when your child submits the FAFSA form.
That means that students are expected to be able to use 20% of their account balance each year for school.
This doesn’t have to be a deal-breaker, but it is worth noting that another college savings option-the 529 college savings plan-counts for much less on FAFSA.
Sound advice!!
Thank you!!
How to start brokerage account for kid before 1 year?
I like Vanguard for this - marriagekidsandmoney.com/how-to-open-a-custodial-brokerage-account-with-vanguard/
I'll work on a video to compliment these steps above
Thank you for this video. After my child turn of age(18-21), can I still contribute money into their UTMA account ?
Find out the "age of majority" in your state. At that age, the account will legally belong to your child. This transfer (of assets and knowledge) is very important to your child's future financial health.
Letting them take the reigns (and showing them how) is important.
For more control over when they receive money in the future, consider looking into a Trust.