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posted Nov 3, 2022 5:10:21 AM

utma 529

Hello. 

New Jersey now allows a State tax deduction for 529. My child has a UTMA account and I plan to transfer some cash assets into a custodial 529 (UTMA 529).

Does a UTMA 529 qualify for a state tax deduction vs a traditional 529?

Also, does the child or parent qualifies for the tax deduction?

Thank you.

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1 Replies
Level 15
Nov 3, 2022 6:54:01 AM

Your question is state specific, but the general rule is only the person making the contribution gets the deduction for the 529 contribution.  So, it's not clear who gets the deduction (the money is now the child's money, but was originally the parent's 

 

Contributions to a UTMA don't count, for a 529 deduction.   But, transferring money form a UTMA to a 529 does count as deductible contribution.

Here is a link to NJ specific info:

https://www.savingforcollege.com/article/new-jersey-to-offer-529-plan-tax-deduction

 

Link to UTMA to 529 transfers https://www.merrilledge.com/ask/college/can-you-transfer-funds-from-529-plans