The UTMA Account - For Kids College Savings (+)

Tammi and I have been avid fans of Dave Ramsey and Ramsey Solutions for more than 30 years. We were married at age 20 and found ourselves in a challenging financial situation. Fortunately, we discovered Dave Ramsey, in fact, on a clearance rack cassette tape in an Indianapolis bookstore. We listened to his advice and were captivated; it changed our lives forever. This journey transformed our finances, our marriage, and redirected my professional career.

Today, I work as a Financial Advisor at Whitaker-Myers Wealth Managers and hold the additional designation of Certified Ramsey Solutions Master Financial Coach. Over the past 15 years, I have had the privilege of helping hundreds of clients with money management and financial planning.

Saving for College

There are several savings options for Kids' College, but we prefer the Uniform Transfer to Minors Act (UTMA).  The UTMA can be used for any expense benefiting the minor.  This is what we mean by “+”.  The funds can be used for college and for any other expenses. 

A recent caller on the Ramsey Show shared that his parents did a great job saving for his college in a 529 plan.  In fact, they saved nearly $100,000 for college in his 529 plan.  It turns out that he earned a full scholarship to the United States Military Academy.  He did not need the 529 funds for college.  He wanted to know how he might use these funds for expenses other than college.  Is there a way?  Yes, but the process is slow, cumbersome, and outside the scope of this article.  If his parents had set up a UTMA account, he would have had easy access to these funds and could have used them any way he wished. 

What do you need to know about the UTMA accounts?

Here are some steadfast facts to know when setting up a UTMA and the benefits of them:

1.     The funds can be used to benefit the minor for any expense, including college

2.     There is no contribution limit (although be aware of the gift tax limits, so be sure to work with your advisor on this)

3.     There are no income limits

4.     The minor child takes control of the funds at the age of majority (ex. OH is up to age 25)

5.     Contributions may affect eligibility for financial aid

Our Savings Plan

So, how did we save for college using the UTMA accounts?  We saved a fixed amount every month starting at age 1.  Our goal was to pay for college tuition.  We wanted our children and now our grandchildren to have “skin in the game” and pay for their own room and board, college fees, books, gas, etc.  It was important to us that they not receive a “completely free ride” for college.  Our kids worked their way through college.  We saved and paid for their tuition each semester.  We controlled the funds through college.  And we gave them the remaining balance of the UTMA as a graduation gift.  This UTMA account helped them graduate debt-free and gave them a boost post-graduation.

Would you like to know more and create a strategy for your family? If so, let’s talk about money management and financial planning.

Financial Planning and Money Management

I have had the privilege of serving many hundreds of clients over the years.  I absolutely love helping our Ramsey clients and others to change their lives and to build God’s Kingdom.  There is no better career calling.  Some clients are fully committed to making these real changes.  Are you tackling baby steps 1, 2, and 3, or have you moved on to steps 4, 5, 6, and 7? 

We can help you wherever you find yourself on your financial journey.  It just takes your determination and a relentless commitment. It is not easy, but it is truly worth it.  You can do it.

And I am here and happy to help.

Would You Like to Learn More about Financial Planning?

My primary objective as a Financial Advisor is to help clients plan and manage their finances to create financial peace. If you’d like to explore more, please use my calendar link to schedule an introductory planning meeting today.