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529 Plans

For more information regarding college savings plans, please visit www.collegesavings.org (external link - opens new window). Participation in a 529 Plan does not guarantee the investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses. State programs vary and therefore you should carefully review individual program documents before investing or sending money. Federal income tax on the earnings and a 10 percent penalty on distributions for non-qualified expenses may apply. RBC Wealth Management is not a tax advisor. All decisions regarding the tax implications of your individual investments should be made in connection with your independent tax advisor.

When discussing transfers from UTMA or UGMA to a 529 Plan
Transfers from an UTMA or UGMA to a 529 Plan may violate specific state laws. A 529 Plan can only accept cash, thus, any securities in a UTMA/UGMA account would have to be sold. Capital gains could become a taxable reporting event for the minor. You should seek the advice of a qualified professional to determine all of the legal consequences of this type of transfer.