Should I keep open my UTMA account or liquidate the investments and transfer them into my Roth IRA, brokerage account, or HSA account?
I'm 29 years old and have received full possession of the UTMA account from my father who was previously listed as the custodian. Is it more beneficial to leave the account where it is or close it and consolidate the funds into my Roth IRA? UTMA balance is approximately $4,000 and my IRA's balance is approximately $9,000. Alternatively, should I transfer the money into my brokerage account or HSA account?
Congrats on taking steps toward your future! If you already have emergency savings, which sounds like you do based on having money in a Roth, it might be a good idea to put it in your Roth. You have until April 15th of this year to contribute toward 2018 contributions in your Roth, for a max of $5,500. So if you have emergency savings and don't need the money for any short term goals like a home purchase, etc. consider maxing out your Roth for 2018 if you have not already done so. If you have maxed out 2018, then contribute toward 2019 ($6,000 contribution limit).
Since this UTMA is for you and you’re an adult, you can do whatever you want. Being responsible as you’re, coming to this platform to ask questions, I’m encouraged that you will do the right thing for that savings.
A couple of notes:
1) You can’t merge this UTMA account with a Roth. You must have to have an earned income first to make the Roth contribution. If you made more than $5,500 income in 2018 but did not make any contribution yet, you can liquidate the UTMA and then write a check to your Roth.
2) Same applies to your HSA. The difference is you must have a high deductible health insurance plan for 2018 in order to make the HSA contribution. For 2018 single, the limit is $3,450.
Thus, you may want to fund the HSA first (if you qualify), and then use the difference to fund the Roth. Only after you fund both tax-advantaged accounts, then do the taxable account.
You are really not supposed to keep money in a UTMA account after the child (in this case you) is over 18 years old. The account should be transferred into your own name as an individual account. It can be used as interim money if you need it for emergencies or other goals (house purchase, etc.). If you'd like the money to be used for retirement, go ahead with the Roth IRA. Be aware that you will need to sell any securities in the UTMA to cash and then fund the Roth IRA. If there are gains on the securities that you sell, you will be paying capital gains tax.