Ugma/utma Conversions to 529 When Do They Make Sense

Financial Professional Content Many parents have established an UGMA/UTMA custodial account as a funding vehicle for a child's future educational expenses. Oftentimes, these accounts have significant investment balances. Should an existing UGMA/UTMA be converted to a 529 plan? The answer will usually depend on whether or not the child is exposed to the insidious "kiddie tax." Here are the rules of thumb that will make it easier to make the proper decision. The kiddie tax refers to the set of federal tax rules that applies the parent's marginal tax rate to the unearned income above $2,000 reported by a child under 19 or a full-time college student under 24. Carve-outs from the kiddie tax apply to certain children who can show enough earned income to be self-supportive. Even when subject to the kiddie tax, the child's first $1,000 of unearned income is sheltered completely by the standard deduction, and the next $1,000 of unearned income is taxed at the child's own tax bracket (10 percent for ordinary income and 0 percent for long-term capital gains). Rule-of-thumb 1: If you know the child is subject to the kiddie tax in 2013, and will be in future years, seriously consider a conversion to a 529. Explanation: Some portion of the child's investment income is currently being taxed at a high rateï ¿ ½i.e. the parents' rateï ¿ ½and so the tax savings potential of a 529 plan becomes compelling. Because only cash contributions may be made to a 529 plan, the conversion will trigger capital gains on any built-up appreciation in the UGMA/UTMA, and those gains will be subject to the kiddie tax as well. But you might decide the capital gains are going to be triggered at some point anyway, either when the account is spent down or when its investments are reallocated, and it simply becomes a matter of this year versus a future year. If the built-up gains in the UGMA/UTMA are so large as to cause a tax or financial-aid detriment if triggered all at once, reconsider the conversion strategy. Rule-of-thumb 2: If you know the child will NEVER have enough unearned income to be subject to the kiddie tax, hold off on the conversion. Explanation: The child is already in a very favorable tax situation with the existing UGMA/UTMA, and little, if any, advantage can be gained by using a 529 plan. This is especially true if a conversion to a 529 would trigger the kiddie tax because of capital gains. Remember, even if the account is appreciating so much that the liquidation of the UGMA/UTMA might cause a kiddie tax problem in the future, the custodian can take steps each year to "release" part of the gain (keeping total unearned income below $2,000) and reduce or eliminate that future problem. Let's assume you expect a 5 percent total annualized return in the UGMA/UTMA. An account balance below $40,000 ($2,000 divided by 5%) can probably be managed to stay below the kiddie tax threshold. However, consider the effect of compounding on future account balances. Rule-of-thumb 3: If the child is not currently subject to the kiddie tax, but would be if all appreciation in the UGMA/UTMA were recognized each year for taxes, a projection exercise may be necessary. Explanation: Unfortunately, the projection will not be easy to do with any level of precision. For one thing, the kiddie tax threshold increases each year with inflation, and so only the account appreciation in excess of the inflation rate will benefit from the tax sheltering of a 529 plan. For another, the timing of the gains recognition might be managed to lower the future exposure to the kiddie tax. If you are lucky, a modest effort to project the future will steer you toward one of the first two rules of thumb. Rule-of-thumb 4: If the child is in the process of applying for financial aid, most likely make the conversion. Explanation: Converting a non-529 UGMA/UTMA to a 529 UGMA/UTMA immediately boosts a studentï ¿ ½s financial-aid eligibility by recharacterizing the asset from a student asset (included in Expected Family Contribution at 20% of value) to a parent asset (included in EFC at 5.64% or less of value). There is no particular logic in this ruleï ¿ ½it is simply what the law says as a way to remove disincentives for college savings. This conclusion assumes, of course, that you will be liquidating the account and recognizing capital gains anyway, in order to pay for college. Financial Professional Content Many parents have established an UGMA/UTMA custodial account as a funding vehicle for a child's future educational expenses. Oftentimes, these accounts have significant investment balances. Should an existing UGMA/UTMA be converted to a 529 plan? The answer will usually depend on whether or not the child is exposed to the insidious "kiddie tax." Here are the rules of thumb that will make it easier to make the proper decision. The kiddie tax refers to the set of federal tax rules that applies the parent's marginal tax rate to the unearned income above $2,000 reported by a child under 19 or a full-time college student under 24. Carve-outs from the kiddie tax apply to certain children who can show enough earned income to be self-supportive. Even when subject to the kiddie tax, the child's first $1,000 of unearned income is sheltered completely by the standard deduction, and the next $1,000 of unearned income is taxed at the child's own tax bracket (10 percent for ordinary income and 0 percent for long-term capital gains). Rule-of-thumb 1: If you know the child is subject to the kiddie tax in 2013, and will be in future years, seriously consider a conversion to a 529. Explanation: Some portion of the child's investment income is currently being taxed at a high rateï ¿ ½i.e. the parents' rateï ¿ ½and so the tax savings potential of a 529 plan becomes compelling. Because only cash contributions may be made to a 529 plan, the conversion will trigger capital gains on any built-up appreciation in the UGMA/UTMA, and those gains will be subject to the kiddie tax as well. But you might decide the capital gains are going to be triggered at some point anyway, either when the account is spent down or when its investments are reallocated, and it simply becomes a matter of this year versus a future year. If the built-up gains in the UGMA/UTMA are so large as to cause a tax or financial-aid detriment if triggered all at once, reconsider the conversion strategy. Rule-of-thumb 2: If you know the child will NEVER have enough unearned income to be subject to the kiddie tax, hold off on the conversion. Explanation: The child is already in a very favorable tax situation with the existing UGMA/UTMA, and little, if any, advantage can be gained by using a 529 plan. This is especially true if a conversion to a 529 would trigger the kiddie tax because of capital gains. Remember, even if the account is appreciating so much that the liquidation of the UGMA/UTMA might cause a kiddie tax problem in the future, the custodian can take steps each year to "release" part of the gain (keeping total unearned income below $2,000) and reduce or eliminate that future problem. Let's assume you expect a 5 percent total annualized return in the UGMA/UTMA. An account balance below $40,000 ($2,000 divided by 5%) can probably be managed to stay below the kiddie tax threshold. However, consider the effect of compounding on future account balances. Rule-of-thumb 3: If the child is not currently subject to the kiddie tax, but would be if all appreciation in the UGMA/UTMA were recognized each year for taxes, a projection exercise may be necessary. Explanation: Unfortunately, the projection will not be easy to do with any level of precision. For one thing, the kiddie tax threshold increases each year with inflation, and so only the account appreciation in excess of the inflation rate will benefit from the tax sheltering of a 529 plan. For another, the timing of the gains recognition might be managed to lower the future exposure to the kiddie tax. If you are lucky, a modest effort to project the future will steer you toward one of the first two rules of thumb. Rule-of-thumb 4: If the child is in the process of applying for financial aid, most likely make the conversion. Explanation: Converting a non-529 UGMA/UTMA to a 529 UGMA/UTMA immediately boosts a studentï ¿ ½s financial-aid eligibility by recharacterizing the asset from a student asset (included in Expected Family Contribution at 20% of value) to a parent asset (included in EFC at 5.64% or less of value). There is no particular logic in this ruleï ¿ ½it is simply what the law says as a way to remove disincentives for college savings. This conclusion assumes, of course, that you will be liquidating the account and recognizing capital gains anyway, in order to pay for college.

Maternal Depression Case Study - 1431 Words

Wojcicki et al. (2015) also focuses on a sample of low-income Latino mothers and children by examining the genetic impacts on Latino preschool children, who have been exposed to maternal depression. Utilizing genomic DNA samples from 108 four-year-old children and 92 five-year-old children and their mothers, Wojcicki et al. (2015) examines the telomere length within these children. Shorter telomere length has been linked to health conditions, such as cancer, diabetes, and obesity in adults, so determining early-life risk factors can improve the health trajectories of many children (Wojcicki et al., 2015). The purpose of the study is to determine the effects that exposure to maternal depression has on telomere length in children as well as†¦show more content†¦(2010) examines when maternal MDD has the greatest impact on child behavior. Bagner et al. (2010) focuses on the child’s first year of life, which is a sensitive period, in relation to the 175 participants, who w ere mothers from the Oregon Adolescent Depression Project. Bagner et al. (2010) hypothesized that mothers, who had MDD after giving birth rather than before, would have children, who were more likely to have behavioral and emotional issues due to the mother’s inability to help regulate her infant’s emotions and form a secure attachment. Additionally, Bagner et al. (2010) hypothesized that behavioral issues would be stronger among boys than girls in relation to their mother’s MDD, since previous research has shown more adverse effects on boys. The results indicate that maternal MDD during the sensitive period is significantly associated with higher child internalizing and total behavioral problems (Bagner et al., 2010). The results also suggest that there are no significant differences among the child’s gender and behavioral issues (Bagner et al., 2010). 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Juvenile Justice And Its Effects On Society - 1722 Words

Juvenile justice is compared in chapter thirteen. In the nineteenth century, there was an increased number of children at risk and chronic poverty. This overall was a general concern because there was an increase of people in the â€Å"dangerous classes†. There was a child saving movement, in which the poor children represented a threat to the moral fabric of society. The nineteenth century was a time where they had a house of refuge. In this house of refuge, they had a society for the prevention of pauperism and they privately managed, but publicly funded. The development in the nineteenth century for juveniles was reform schools, work, basic education and they were segregated. Juvenile justice in the nineteenth century had a society for the prevention of cruelty to children in New York. In this society they were granted the authority to remove children from where ever they were being mistreated and they assisted the courts in making placement decisions. 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Architecture Platform and Track Layout

Question: Discuss about theArchitecturefor Platform and Track Layout. Answer: Introduction The government saw the need to construct a new central passenger station that would replace ad-hoc construction that existed by then hence the construction of Flinders Street Station. Flinders Street Station, an icon of the culture of Melbourne is treated as a symbol of the capital of Victoria since time memorial. More often than not, the building is used as an imaginary representation of Melbourne city and the popular quotes used in Melbourne Ill meet you in the steps and Ill meet you under the clocks resulted from the clocks found at the main entrance. These clocks are used to show the departure times of the trains depending on the lines they are running1. Flinders Street Station was constructed between 1905 and 1910. It was designed by HPC Ashworth and James Fawcett who were employees of the railway, a contract which was awarded on a competitive basis and involved seventeen architects. The design of the location of the entrance, platform and track layout, platform roofing type, room layouts and even the concourses had already been decided hence the competition was just for an appropriate building2. The architects named the design Green Light and borrowed heavily from the French Renaissance style which was composed of a tall clock tower and a large dome. The tower and the large dome was one of the unique features of this building. A three-arched roof that ran from east to west over the survives of the concourse was yet another attractive feature in this design. The construction was done in phases and by two different contractors. Peter Rodger who was a Ballarat builder was the one awarded the initial tender but was terminated in 1908 after the company recorded very slow progress in the construction process which was blamed in the contractor. Royal Commission took over the construction in May 1910 to completion. [1]Construction of the domes commenced in 1906 and it involved massive and strong foundation in its structure since it was extended over the railway tracks2. Initially, it was intended that the facades of the building be done in stone but this changed during the construction as stone was thought to be too expensive and instead red brick rendered with cement was adopted for use in the main building. On the Flinders Street side on the ground level, grey granite was used for numerous details so as to display the significance of this great public work. The southern faade of the principal building as well had a unique material finish. Lightweight timber frame with zinc sheets cladding painted in red was adopted. This aimed at turning the balconies which were inside in the train shed into corridors as opposed to open access areas that they would otherwise have been. The gate at the southern front was constructed using lightweight timber clad. To make the bricks used on this facade look big, zinc sheets which were painted in red color were scored into the blocks3. The first three floors of the principal building contain the largest number of rooms with most of them being located at the frontage of Flinders Street. These rooms are mainly to serve the purposes of the railway even though there are provisions for emergency as well. Ticket windows are constructed at each entry points of the station. The interiors of the building are very spacious allowing both visual and spatial continuity. The building encompasses numerous elements among them curves, lines, planes (both vertical and horizontal) as well as masses. These different elements are well organized by the architect to bring out a building that stands out as one element and not an antagonizing structure. The differences in the surface finishes of all the elevation created a different feeling as one moves around the building thereby eliminating dominance of a specific element or feature4. The strategies of design and architectural language of this building have their origin from the immediate context of the site and its place within Melbourne city. The reorganization of the station is in such a way that the historic fabric has been restored and revered. The final design concisely responded to the diversity in the site conditions including the city, the surrounding riverbank and the Federation Square. This can be illustrated from the patterns of the underpasses, bridges, vaults and the way in which the park has been oriented toward an organic movement between the river and the city5. The manner in which these features are stitched together in the design as well display the contextual relevance of the design. The architect managed to successfully harmonize the diverse site by ensuring each of the facades of the building responded appropriately and excellently to the nature of the site for which it was in contact with. The building thus turned out to be in harmony both within itself and with the contextual setting on which it sat. The design also facilitated a civic precinct which was friendly to pedestrians by creating important linkages that were referenced to the key nodes of the Federation Square and the concourse thereby giving the square a new outlook6. This ensured a preserve of the cultural heritage of the dwellers of the city of Melbourne. [2] The decision to relocate the concourse opened the stations eastern edge generating a classic covered public space opposite the Federation Square. The orientation of the building contributed greatly to the revitalization of the important components of heritage thus enhancing a view of the historic built fabric. The interior spaces provided at the major transition nodes between Flinders Street and the concourse give strategic mechanisms that allow for new activities on the site. These transition nodes also give opportunities for fresh public functions to this part of the city7. A new riverscape is created by the expansion of the riverbank that contains double height vaults of brick, entry points and retail tenancies. The patterns of the openings of the building create and increase high degrees of porosity of the building, a feature exhibited by the town as well8. References Boyd, Robin. The Puzzle of Architecture. Melbourne: Cambridge Uni. Press, 2015. Brown-May, Andrew. Federation Square. Washington: Hardie Grant Publishing, 2013. Davies, Jenny. Beyond the Facade: Flinders Street, More Than Just a Railway Station. London: Jenny Davies, 2009. Fairfax, Vicki. A Place Across the River: They Aspired to Create the Victorian Arts Centre. Panama: Macmillan Education AU, 2012. Goad, Philip. Melbourne Architecture. Manchester: Watermark Press, 2007. Holdings, Allia. Flinders Street Station: Melbourne's Festival Marketplace. Kansas: Allia Holdings, 2011. Maitland, Barry. The new architecture of the retail mall. London: Van Nostrand Reinhold, 2010. Perren, Claudia. Expanded Architecture At The Rocks. New York: Lulu.com, 2013.