Make a contribution to a Qualified Tuition Plan from a childs custodial account.

You may want to make a contribution to a Qualified Tuition Plan from your childs custodial account. However, some states Qualified Tuition Plan do not allow contributions from custodial accounts, trusts, or other entities. Therefore, you should look for a state plan that does allow contributions from these types of entities. Using the childs custodial account to fund a Qualified Tuition Plan may not make sense if the funds are highly appreciated and there is a short time period for the fund to accumulate before college. The loss due to taxes paid on the funds gains will not be offset by the Qualified Tuition Plan tax benefit.