Many Investors Are Finding Even More Reasons To Use 529 Plans To Help With Education.  

When beginning to plan for a child’s future or when evaluating a current savings plan, many families often ask,  “What are the differences between UGMA and UTMA accounts, 529 college savings plans, and prepaid tuition plans and what should I use?”   

The key to answering this question lies first, in understanding the types of accounts available to help with saving for a child’s future along with their pros and cons. After which it’s easy to understand how the “tax cuts and jobs act.” being signed into law has made many 529 plans more attractive for parents and families.  

  • Uniform Gift to Minors Act (UGMA)/ Uniform Transfer to Minors Act (UTMA):  An UGMA/ UTMA is common type of trust for account used that allows securities to be purchased on the behalf of minors.  Simply put they are custodial accounts established at a financial institution by an adult (typically a parent or grandparent) for the benefit of a minor child.    

The assets inside both UGMA and UTMA accounts are not limited to the use for higher education and maybe used to pay other expenses for a child.

The major drawbacks typically associated with UGMA and UTMA accounts have been the end of ability to change the beneficiary on the account and the requirement for the assets to be transferred into the name of the minor when they turn the age of majority. Depending on the state you live in the age of majority could be 18 or 21.  

This means once a UGMA or UTMA Account has been set up you could not change minor child’s name on the account to another sibling or child even if the minor child listed no longer needed the funds in the account.    Read more: Custodial Accounts

Prior to the creation of 529 plans, UGMA and UTMA accounts for the most common and popular with families planning for child’s education.  Many families are now converting these accounts to a section 529 plan.  These 529 plans are titled “Custodial Section 529 plans” since the funds in them came from UGMA and UTMA accounts.   The custodial section 529 plans the assets Will still transfer the assets to the name of the child once they meet the age of majority.  Typically 18 or 21 depending on the state you live in.   If you are considering converting a UTMA/ UGMA be sure to check with your trusted tax advisor prior to converting to ensure you understand all your options and the implications.   

  • Section 529 prepaid tuition plan:Prepaid tuition plans allow the account holder to purchase tuition credits at the present price even though they will not be used until sometime in the future, when tuition costs will have most likely increased. These plans are state sponsored and only available in some states. However, it is possible to participate in a prepaid tuition plan outside of the account holder's current state of residence.  Read more: 529 Prepaid Tuition Plan .  


  • Section 529 college savings plan: section 529 college savings plan allows the account holder to establish an account for the beneficiary and to use the money to pay such expenses as tuition, room and board, books, and fees.   The assets inside the account maybe invested in stocks, bonds, and mutual funds.  Any gains on the assets would not be subject to tax when withdrawn from the account, as long as the funds are going to pay for qualified higher education expenses.  Read more: 529 College Savings Plans.


Under prior law, assets held in college savings accounts under IRC 529, known as 539 plans, could only be used for “qualified higher education expenses” these qualified higher education expenses were typically defined as tuition, fees, books, supplies, and required equipment at colleges, universities, vocational schools, or other postsecondary schools.  The new “Tax Cuts and Jobs Act” expands the definition of “qualified higher education expense” to now include tuition at an elementary or secondary public, private, or religious school.    Giving more flexibility to the use of funds inside of the savings accounts.   

This expanded definition of “qualified higher education expense” made the already popular section 529 savings plan even more attractive to families seeking to save for children’s education and allowing for increased tax savings.  If you have questions regarding how is investing at a 529 college savings plan may benefit your family and fit into your current financial plan, contact your financial advisor or Certified Financial Planner™.  Read more: The difference between a financial advisor and Certified Financial Planner™



This information is general in nature and may be subject to change. Financial professionals and other representatives are not authorized to give legal, tax or accounting advice. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. For advice concerning your individual circumstances, consult a professional attorney, tax advisor or accountant.

Securities offered through NMS Capital Advisors, LLC, Member FINRA/SIPC. Advisory products and services offered through Castle Wealth Advisors, LLC, a Registered Investment Advisor. NMS Capital Advisors, LLC and Castle Wealth Advisors, LLC are unaffiliated entities.



Heather Castle

I am originally from Virginia and grew up in Tuscaloosa, Al.  I completed both of my degrees at the University of Alabama.  My undergrad degree in Finance and then later my MBA from the Manderson Business School through their Executive MBA program. 

I started Castle Wealth Advisors, LLC because I wanted to provide ethical and approachable financial planning and investment management to individuals and business owners, concerned with their financial futures, regardless of age, sex, race, or net worth.

I've always believed clients should work with reputable, qualified, and experienced advisors.  So it was important to me to gain industry experience as well as pursuing additional industry specific designations.  I have passed the following licensing exams:

     Series 7, General Securities Representative

     Series 66, Investment Advisor Representative 

     Series 9 & 10, General Securities Sales Supervisor

     California Life, Health, and Variable Insurance (License #0K01554)

I have been in the financial services industry since 2006 and have work with many differing type of clients over the years.  One thing I know to be true, everyone wants to feel heard and cared about.  Meaning everyone I have ever worked with wants to feel like their desires, wants and needs have been heard and taken into consideration when speaking about their personal financial matters.

Many people have the same goals, they just express them differently, and then there are a few who’s view and desires are completely different.  This is one of the aspects I love about my job.  The PEOPLE!  I get to meet some many interesting people and they challenge me daily.  No day in my line of work is the same.  Today I could be planning for a family who owns a small business and tomorrow working with a women going through a painful divorce.  Listening and building financial plans and strategies around personal needs is why many of my clients have said they do business with me and have stayed with me. 

Another reason I love my job… I get to truly HELP people.  I get to make a living and provide for my family while helping others.  Over my career I have felt a need to dive deeper into financial planning and working with high net worth individuals who have greater planning and investing needs.  Listed below I have highlighted a few of the areas I specialize in:

·      Women in transition (divorce/ death)

·      Corporate Executives

·      Young Entrepreneurs

·      Small Business Owners

·      Family with Special Needs Members

·      Complex Retirement and Estate Planning Needs

Currently I live in Brentwood and really enjoy the West Side of Los Angeles.  I am actively involved with the Junior League of Los Angeles.  I have a passion for trying new things and new experiences.  So, in my free time I love traveling and scuba diving.  I also am interested in learning French, taking pilot’s lessons and dancing the tango!