However, been researching all the past 529 threads here and I’m still very confused as to the various trade offs in my situation for listing either myself vs the children (I do have their SSNs) the beneficiary of record for now, especially with regards to tax implications with beneficiary transfers. My factors:
- My understanding is that for FAFSA purposes, it would be beneficial to list myself as the beneficiary, and only change the beneficiary to the children in their sophomore year. However, it’s unclear to me under current regulations whether doing so may incur additional gift taxes at the time of beneficiary change, or eat out of my lifetime gift exclusion.
- I would also like to maintain the flexibility to change the beneficiaries in the future, for example if I have my own children at some point — currently this seems less likely, but you never know (I do not plan to inform my sibling of the existence of these 529 plans until closer to distribution for this reason). If my goal is to maintain the potential flexibility to change the beneficiary to my own child in the future, from tax purposes is it more advantageous to have the current beneficiary be myself, or my sibling’s children?
- Potential complicating factor here is that due to my age, if I have my own future children, they would be more than 37.5 years younger than me, so it’s unclear to me if/how “generation skipping” tax rules might inadvertently affect things here.