Ask Terry Questions Utility Stock and a 529 Plan

Utility Stock and a 529 Plan

By Terry Savage on July 26, 2015 | College Savings / Student Loans


My fiance’s son will start college this fall as a freshman, out of state. His grandfather has utility stock, worth approximately $4,500 in a Uniform Gift to Minor’s account that he’s contemplating transferring to his mother’s name. Would you advise that she roll that over into a 529 plan; cash it in and apply it towards tuition; or let it mature with the utility company? Thank you!

Terry Says: You’re a little late in the planning for this if the family is applying for financial aid this year or next. Money in an UGMA account must be disclosed on the FAFSA application — and it weights 5x more heavily against you in the financial aid formula. Not much you can do now, except cash it in and pay the taxes on your son’s return — assuming he is filing a separate return. If not, consult your tax advisor about how it should be reported on your return.

Not much sense in putting the money into a 529 plan now. It won’t have much time to grow. Just use it for college expenses.

And double check that the shares are named in an UGMA account — not in grandpa’s name and “intended” for college money.



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