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Is an UTMA or 529 the Best Custodial Account for My Child?

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With a custodial account, a beneficiary’s money is managed by a responsible party on their behalf. Often, though not always, the responsible party is the parents or guardians of a minor who has either been gifted money or is part of a college savings plan. The responsible party, or fiduciary, is legally required to act in the best interests of a child.

A custodial account allows a minor to save and invest. Two of the more common custodial account options are UTMA and 529 accounts, but which is the best custodial account? In order to discern which one is right for your minor, let’s delve into the features of these custodial accounts and their different benefits.

What Is a 529 Account?

A 529 account is a tax-advantaged savings account designed to encourage saving for higher education. It is a college savings plan to be used for a beneficiary’s educational expenses and is sponsored by the state or a state agency. Savings can be used for tuition as well as other qualified expenses, such as books, computer equipment, and room and board. Typically, when you enroll, you receive a starter kit detailing the full list of qualified expenses covered by your state’s plan.

To avoid taxes and penalties, use the account for these qualifying expenses and make sure to keep the withdrawals in the same calendar year as the expenses. This way, you can easily make withdrawals that are federal income tax-free and penalty-free. Cover educational expenses or reimburse yourself for costs paid out of pocket. If you need to make a withdrawal for a non-qualified expense, you will be able to, but be aware you will be subject to a 10 percent penalty as well as owe federal income tax on these non-qualified withdrawals.

Funding a 529 plan allows your money to grow tax-deferred, which in turn enables tax-free withdrawals. Anyone can open or contribute to a 529 account on behalf of the beneficiary. Parents, grandparents, other relatives, and friends can all contribute. Plus, 529 plans extend to technical and vocational schools, as well as K-12 tuition.

Benefits of a 529 Plan

In addition to the aforementioned benefits, 529 plans offer several tax-free financial benefits:

  • Flexible educational opportunities: Fund higher education such as college, pay for K-12 education, apprenticeship programs, technical, or vocational schooling.
  • Tax-deferred growth with tax-free withdrawals: Grow money without paying taxes on the savings and make qualified tax-free withdrawals.
  • Beneficiaries can change over time: Use the same account for multiple minors or fund an adult going back to school. Use a 529 account for siblings; each can take turns using the funds, provided it’s not at the same time. Make sure to carefully look at the account’s terms to avoid penalties.
  • Small impact on financial aid eligibility: Since the account is not owned by the minor, and is instead owned by the fiduciary, there is little impact on federal financial aid eligibility.
  • Unused funds can be rolled over to a Roth IRA for retirement: Under the SECURE 2.0 Act, beneficiaries of 529 accounts that have been open for at least 15 years can transfer these funds without paying taxes or penalties.

What Is an UTMA Account?

The Uniform Transfers to Minors Act (UTMA) allows minors to receive gifts such as money, patents, fine art, royalties, or real estate without the aid of a guardian or trustee. An UTMA account enables the gift giver or custodian to manage a minor’s account while avoiding tax consequences on the gift until they are of legal age. This way, a parent, relative, or other adult can pass on gifts to minors without having to set up a formal trust, while increasing tax savings on these assets.

Typically, the gift giver manages these assets as the official custodian unless they appoint a third party to act as custodian. Once the minor is of legal age, the UTMA account is transferred to them.

Benefits of an UTMA Account

UTMA accounts provide flexibility in investing. Some of the main advantages of an UTMA account include:

  • Significant tax saving: Money contributed to an UTMA account is exempted from paying a gift tax up to a certain amount per year. Earned income from the funds is taxed according to the tax rate of the minor, which is lower than the adult gifting these assets.
  • Invest in high-return assets or traditional assets with custodial accounts: These can include stocks or CDs and can also be used to invest in real estate.
  • Flexible financial options: Without the limited spending categories of a 529, money from an UTMA account can be used for more than educational expenses but can be rolled into a 529 plan if necessary.

Choosing the Best Custodial Account

With every financial option, there are benefits and drawbacks that must be considered. Both types of accounts provide opportunities for minors to invest and save, so which is the best custodial account for your beneficiary? This will depend on the financial goals of both the beneficiary and the custodian.

If education is the purpose of the savings plan and the beneficiary qualifies for financial aid, then the 529 plan is a great option and may be the preferred account. UTMA accounts have a significant impact on financial aid and may hurt eligibility, such as need-based scholarship programs.

However, if a minor prefers flexibility without limited spending categories, then an UTMA account may be the better fit. UTMA accounts can be used for educational expenses but is not a requirement. Once a minor is of legal age, the assets are theirs to spend on whatever they choose. With a 529 plan, there may be some risk of losing unused funds or paying penalties to withdraw the remaining balance. Discuss financial goals to choose the best custodial account for your savings needs.

At Capital Credit Union, we have savings account options that work best for your lifestyle and goals. Whether you are an adult or minor saving and investing for the future, we have a plan that sets you up to win. Becoming a member is easy, join today and start saving.

 

How to Take Better Care of Your Skin

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When you were younger, it is highly likely that at some point or another, your mother, sister or close friend told you that you need to start looking after your skin now so that you do not regret not doing so in the future.

So, with respect to that invaluable advice, continue reading to learn how to take better care of your skin.

Be Gentle with Your Skin

First and foremost, it is highly likely that there are often times when you scrub your hands too hard, dry shave your legs to save time, and commit a whole host of other sins to your skin on a regular basis.

From now on, take the following pieces of advice as ‘gospel’:

  • Ditch the strong detergents and soaps and instead go for mild toiletries
  • Moisturize your face and body every single morning or night
  • Consider laser hair removal over regular shaving
  • Pat your body dry with the towel rather than rubbing yourself down
  • Limit the number of baths you take and lower the temperature

Visit a Professional Clinic

If you have recently noticed one or more outbreaks of dry skin, eczema or even psoriasis anywhere on your skin (although this tends to happen around the elbows, forehead, ankle, and knees first), then making an appointment to see your dermatologist is crucial.

However, if you have noticed no such thing, but your skin feels generally dry and has a dull hue where it used to be positively glowing, then booking an appointment at a salon is the best idea. For instance, take a look at what this beauty salon Holywood has in service offers as an example of the kind of procedures available.

Keep Your Stress Levels to a Minimum

One of the worst contributing factors to dry, dull, and lifeless skin is one that is not easily fixed, as it is not visible to the naked eye.

Stress and the feeling as if you simply haven’t got enough hours in the day to complete all your professional tasks and simultaneously take care of all your personal responsibilities can be exceedingly detrimental, not only to your skin but to your emotional health and wellbeing.

Simple yet effective ways to help to reduce your feelings of stress and anxiety include, amongst a host of others, the following:

  • Minimize the amount of time you spend on your phone and tablet each day
  • Cultivate a strong support network of friends and family around you
  • Arrange to start beginner yoga classes in your local area
  • Practice mindfulness and deep breathing techniques
  • take regular walks outside and feel the sunshine on your skin

Improve Your Diet

As boring and obvious as it may sound, it really is true that the more water you drink and the more fruit and vegetables you eat can make a hugely positive difference, not only to your skin but also to the rest of your body.

So, be sure to keep your skin as hydrated as possible and make sure that every day, you are consuming at least five different portions of fruit and vegetables, as well as enough lean meat and other healthy proteins.

 

3 Ways To Help Your Kids Feel A Sense Of Community

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Regardless of where you live, you can and should help your kids find a sense of community with the people who live around you. This can help them to feel that they have a support system, to trust people in the world, to learn how to deal with the differences of others, and so much more. But in today’s world, a sense of community often doesn’t come naturally. Rather, you really have to go out and find this with your children.

To help you see how this can be done, here are three ways to help your kids feel a sense of community where you live.

Spend More Time Out In Your Community

One of the first and best things that you can do to help your kids learn about your community and connect with the people there is to just spend more time out in the community. If your community has any amenities, especially ones that are focused toward kids or families, try to make it a habit to use these amenities.

Even just going to a park or visiting a library can help your kids connect more with your local community and meet new people. And, as you use the services that are already available, you’ll encourage your local government to add new and better amenities that your family can continue to take advantage of for years to come.

Find Opportunities To Volunteer

Along with using the amenities and attending events that are already in place, you and your child can also look for opportunities to volunteer within your community as well.

Teaching children the joy of serving others is something that will stay with them all throughout their life. So if you’re wanting your kids to look for ways to be a helper to others and display empathy and affection for people both that they know and that they don’t, volunteering around the community—be it at events, in assisted living facilities, at a soup kitchen, and more—can help with this.

Attend Community Events

If you want your community to put on better events and to hold more events that interest your family, getting involved in the events that do take place is one great way to ensure that this happens in the future.

Along with wanting to get more and better events, going to community events can be a great way for your kids to get familiar with the area in which you live, meet people who make decisions for your area, and get to know more people in your city or town that they otherwise may not have crossed paths with.

If you want your kids to feel a real sense of community in the place that you live, consider using the tips mentioned above to help you learn how this can be accomplished.

 

How to Give Your Home a More Contemporary Feel

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Contemporary interior design is one of the most fascinating and, interestingly, most varied design themes and absolutely depends on the individual’s interpretation of it.

Often confused with modernism, contemporary design is far less specific and not held to a particular period and just represents present-day fashions and trends.

So, if you want to give your home a more contemporary design feel, continue reading.

Statement Stone Features

Stone and marble are two highly impactful, beautiful, and highly sustainable natural materials that scream contemporary design. To make a huge difference in the transition from traditional to contemporary, then statement stone is an ideal choice.

A shower unit is a perfect example of where statement stone can both metaphorically and quite literally shine, especially if you take the time to book-match the pieces. Hence, they combine to create a symmetrical yet natural image.

Bold & Bright Colors

For the smallest room in your home, or else if you are living in a somewhat ‘intimate’ space altogether, instead of finding ways of trying to make the space look larger than it actually is, embrace the space and make it the star of the floor.

Kitchens in townhouse apartments, for example, tend to be on the smaller and narrower side, so introducing one or two (complementing) colors to make your smaller spaces pop is a confident way of announcing your new contemporary design direction.

Keep Fixtures & Fittings Hidden

Lighting is at its best, especially in a contemporarily designed space, when it is of a flexible and interchangeable nature, either with dimmer switches or hidden LED strips, and when the room is unoccupied, or else there is no need for lighting, the fixtures and fittings should be subtle.

Directing the point of illumination to a specific part of the room, such as the top of the bathtub, is a fantastic way to adhere to a contemporary design framework while highlighting your favorite décor details. You can find the perfect lighting options at Ligne Roset Bromley to match any room or style of décor.

A Television House

Although numerous elements come together to create an apartment or house that looks and feels decidedly contemporary in style and design, there is one shortcut you must take to fulfill your own brief.

Hiding the television in either an ornate cabinet or in a high-tech way in which, when operational, the unit rises from a hidden base is an absolute mainstay of contemporary interior design.

Declutter

Finally, perhaps the easiest change to make from a more traditional to a decidedly more contemporary interior design feel in theory, sadly not in reality, is to keep each room as clutter-free as possible.

This can often be more difficult if you have small children, as you will need to have a lot of their things to hand. If you can strike a balance between functional and a clear aesthetic within your home, this could be effective way of bringing your home décor and design up to date.

 

5 Tips For Creating The Perfect Baby Nursery

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One of the best parts of getting pregnant is the process of nesting. Creating the perfect space for your baby can not only be creatively fulfilling but also downright fun. Yet, if you’ve never had a baby before it can be overwhelming knowing what you do and don’t need. After all, marketers would have you believe that you need to spend millions for your baby’s nursery.

The good news is that creating a nursery doesn’t have to break the bank, or be overly complicated. To help you through the process, here are some of the most important things to keep in mind in order to create the perfect nursery.

Make Safety a Priority

One of the first things you should consider when creating your baby’s nursery is safety. Make sure that you put their bed in a location that is far from any electrical sockets, sharp objects, or anything that could fall on the bed. The placement of windows and curtains are also important factors to consider. Never put anything in your baby’s crib—even stuffed animals which could potentially suffocate them.

Add The Right Lighting

Lighting is essential when it comes to teaching your baby how to sleep on their own. Some babies may not appreciate total darkness, so you may want to add soft lighting that gives off a soft glow.

However, you don’t want to add too much lighting as this could keep your baby stimulated and discourage them from sleeping for long periods of time. Remember, in the beginning stages of the baby’s life, their nursery is for sleeping not playing. So, your job is to create an environment that promotes soothing and peaceful sleep habits.

Personalize

While it’s not necessary, it’s pleasant to personalize your baby’s nursery with objects that make it feel like it’s your baby’s and not just a generic room. Perhaps you can add some art, or photographs of family. You can also consider adding something like a mobile to the ceiling so your baby has something to look at as they lay and stare up. .

Always Be Practical

When choosing the materials that you need in your nursery, it’s easy to go overboard if we aren’t careful. Be practical and only buy the things that you absolutely need. That means a bed, a chair for feedings, somewhere to keep your children’s clothing, and perhaps extras like an air purifier or sound machine. The more somber and simplified you can keep the room, the more it will promote your baby reaching a sleepy state. Making it overly busy or full of things isn’t the goal when designing the interior of a nursery.

Eventually, your baby’s nursery will be a place for them to run and play in. But for now, it’s simply a place for them to lay their head and receive their feedings. So don’t overthink it, stick to the basics, and you’ll end up with a beautiful nursery that your child will thrive in!