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UTMA vs 529 vs standard brokerage for private school grades k-12

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  • UTMA vs 529 vs standard brokerage for private school grades k-12

    I tried searching the forum for an answer to this, but I am struggling to get clarity with this question. My wife and I send our children to private school costing probably 15k/year/child in K-8 and more starting in HS. We have 4 children thank Gd. If we max out our retirement accounts, should our next stop be a 529 or UTMA (if so, which one?) or should we just stick with a regular taxable?

    I still don't know exactly how much we will be able to save -- I'm in my first year out of endodontic residency, and my profession makes money based upon production. I'm still not sure how much I'm going to make "once I get moving" so to speak.

    Thank you in advance for the help. Please let me know if there is additional information that may be helpful to answer my question.

    Best regards,

  • #2
    You will have to check the rules for the state you live because in some, like mine, 529 funds can only be used for college or above and not for k-12.


    • #3
      I live in NJ, and I believe they now allow it.


      • #4
        If you get a tax deduction for NJ 529 then that’s probably the better option for education expenses. And it won’t be taxed on distribution. While UTMA will get no tax deduction on contributions and income/capital gains may be taxed at your marginal tax rate when funds used, due to kiddie tax rules. Also the UTMA money is the child’s. The 529 can be owned by you/spouse and the beneficiary can be changed to another child if needed.


        • #5
          We do not get a state tax deduction on 529 contributions. We front loaded 529 contributions for college and let it ride. We cash flowed private school tuition.


          • #6
            My state allows 529 for k-12 and offers tax advantages for contributions — so here, 529 clearly the best.