Personal Investments • Investments for the newborn: 529 / Roth IRA / UGMA-UTMA / Dependent Care FSA

UGMA/UTMA seem borderline useless to me. If you’re middle class, those assets can reduce financial aid under both FAFSA and the CSS Profile. If you’re earning $500k and too rich to qualify for financial aid anywhere, then you have the kiddie tax problem and getting to save capital gains taxes on $2600 a year is barely going to be worth the effort.

For a high-income family in CA, the combined maximum tax rate for that $2600 could be 37%(Fed)+14.4%(CA)+3.7%(NIIT)=55.2% so just by clicking the mouse spending several minutes a year they could easily save ~$1400 which is way above my hourly pay.

God, California has a high income tax rate. But if you’re investing stocks, the long term capital gains and qualified dividends would be 20% not 37%. If the kid becomes the legal owner of the funds at 18 or 21, you run the risk of them blowing it all on an expensive car or trips to Vegas or what have you. There’s a loss of control on how the money’s spent.

Statistics: Posted by newparent7 — Wed Feb 12, 2025 12:09 am — Replies 39 — Views 3191

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