UTMA vs 529 vs ?
Hi all, I wanted to get some specific advice as I am planning for my sons (and future children's) future, and am trying to decide on what type of account to open for my son to start investing
I originally was drawn to opening a custodial account (UTMA) so I could have more flexibility in the investments I make through the account, as well as allowing him to use the money for whatever he wants without penalty. But when I look at the tax benefits of the 529, I wonder if this outweighs the flexibility of UTMA?
From my understanding, the 529 can grow tax free (awesome for compound interest), and if my son wanted to use the money for college, it would be tax free. But if he decided to not go to college and I didn't want to transfer to someone else, then it would have a 10% penalty and get taxed at his tax rate. would it make sense that the tax free growth of the 529 could make up for the lack of flexibility and fees?
Would love anyone else's thoughts or inputs for anyone who understands these accounts a little better than I do.
@Scott Trench, you posted on a post of mine last year before he was born asking for general advice and I believe you mentioned the 529 does not look as good to you. Curious if you still hold that belief, and if you still think a custodial account is the way to go?