A 529 account owner can change the beneficiary at any time without tax consequences if the new beneficiary is a member of the family. A member of the family is defined in Internal Revenue Code section 529. If the new beneficiary is not a member of the family, the change will be treated as a non-qualified distribution.
Can a 529 be transferred to a cousin?
According to the IRS, a member of a 529 plan beneficiary’s family includes the beneficiary’s: Spouse. Son, daughter, stepchild, foster child, adopted child or a descendant. First cousin or their spouse.
Can a trust be the beneficiary of a 529 plan?
Trusts are a regular part of estate and education funding planning. Trusts typically can own 529 plan accounts; the benefit of doing so is to avoid the onerous income taxes normally imposed on trust income.
Can you make yourself the beneficiary of a 529?
Remember that as the account owner, you’re not the beneficiary. But if you’re transferring 529 plan savings to someone else, you can choose yourself or your spouse to be the beneficiary going forward. If your child has a step-parent, they can also be named as a beneficiary.
Can 529 be used for parent?
As long as the new beneficiary is a family member—a sibling, first cousin, grandparent, aunt, uncle or even yourself—the money can be used for qualified education expenses without incurring income taxes or penalties.
Can a 529 have two owners?
Each parent can split the funds in the 529 account to make two separate accounts. Ownership of the account can be transferred to one parent.
Can a 529 plan be transferred to a different person?
If the beneficiary is in a different generation than an eligible family member and you would like to transfer the account, the money in the 529 plan may be subject to a generation-skipping tax. For example, if a grandfather changes the beneficiary of a 529 account from himself to his grandson, the account would be subject to an additional tax.
How can I Change my beneficiary on my 529 plan?
Another option is to transfer the account to a new beneficiary, who must be a member of the family, anyone related to the family through blood, marriage, or adoption.
How to choose a successor 529 account owner?
(A very small number of 529 plans permit spouses to establish the account as joint owners.) Pick a successor account owner who you can trust to fulfill your wishes. For most 529 plans, the rights assumed by the successor include the right to request a refund of any or all account assets (subject to tax and penalty on the earnings).
What happens to my 529 account if I Die?
When you fill out the enrollment application for a 529 plan you are asked to name a successor or contingent account owner. This is an important decision. If you were to die or become legally incapacitated, the successor account owner assumes all rights and responsibilities for the 529 account.
