Gifting $10k to my 17 year old nephew

Question

I am very close with my nephew, and I've been saving a little bit here and there throughout his life to give him before college. I now have about $10,000 in my investment account earmarked for him. I'm trying to think through all the options (and their pros/cons) in terms of how to gift this money to him. Relevant info:

• he is 17 now, 18 next year.
• he has a job, but makes ~$2000/yr from it.
• he will be going to a 4-yr college, and will need both loans and financial aid.

The options I've found are:

1. Check/cash, directly to him.
2. Open a 529 in his name.
3. Open a UTMA in his name.
4. Help seed a Roth IRA in his name.

(4) was originally my choice, but his low income (and not filing a tax return) makes me think it wont be feasible. (3) Seems like the next nicest option, but afaict it will count against his financial aid.

Are there other options available? What other information should I use to make this decision?

My objective is to jump-start his long-term savings, but I also wouldn't be opposed to helping him pay for college (hence the 529).

Answer 1

(4) was originally my choice, but his low income (and not filing a tax return) makes me think it wont be feasible.

It is. If he earns $2K/yr you can help him seed the Roth IRA with $2K each year.

(3) Seems like the next nicest option, but afaict it will count against his financial aid.

AFAIK all the three remaining options will show up on FAFSA and will be counted into the assets available to him.

You can also pay his tuition for him, so that it doesn't get added to his assets. That would help him take less loans and use his money elsewhere. It doesn't have to be through a 529 or giving money directly to him, you can just pay the money directly to the school.