Change of 529 Beneficiary and Ownership Questions

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Carolina Shagger
Posts: 34
Joined: Mon Aug 10, 2009 5:21 am

Change of 529 Beneficiary and Ownership Questions

Post by Carolina Shagger »

I have a couple of questions regarding 529 plans that I can’t seem to find a straight answer for.
I have established a number of individual 529 plans for my grandchildren. I am the owner and each child is the beneficiary of their respective account. Each account has approximately $50K in it.
I believe that at least one of my grandchildren will not be attending school past high school and will not be using any of the money. I know that I change the beneficiary at any time to a relative. If I transfer the entire amount from one beneficiary’s account to another’s will I have to file a Form 709? And if so I presume I would have to include any additional money I added to that individual’s account beside the transfe in that year.
Also I believe I can transfer ownership of the account to my children. Do I need to file a Form 709 if the amount in the beneficiary’s name exceeds $15K?
I would like to avoid filing a Form 709 as I (or more properly my heirs) want to maintain my maximum lifetime exclusion as I will be exceeding it when the exclusion amount reverts back to the previous limit which is the present law (not speculating about what Congress may do).
Thanks for your help.
bogcir
Posts: 88
Joined: Thu Jan 21, 2021 1:38 am

Re: Change of 529 Beneficiary and Ownership Questions

Post by bogcir »

not an expert, but researched this a while back.

You can change beneficiary within the same generation or above without triggering gift issues.

So grandchild -> grandchild, or grandchild -> grandchild's parent, is ok.
Grandchild -> great-grandchild will trigger gift tax reporting.

https://support.wealthfront.com/hc/en-u ... neficiary-
BrokerageZelda
Posts: 104
Joined: Sat Apr 10, 2021 10:39 am

Re: Change of 529 Beneficiary and Ownership Questions

Post by BrokerageZelda »

Does anyone know if it's possible to do partial transfers of funds between 529 beneficiaries within a family but across generations (e.g. parent to child), $15k at a time, to avoid filing gift tax returns like you would if you simply re-titled the entire 529 account to the new beneficiary? Maybe through rollovers? This isn't something I've seen on 529 FAQ pages, but I imagine it's something many people would want to do at some point.
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HueyLD
Posts: 8344
Joined: Mon Jan 14, 2008 10:30 am

Re: Change of 529 Beneficiary and Ownership Questions

Post by HueyLD »

BrokerageZelda wrote: Fri Jun 11, 2021 9:38 am Does anyone know if it's possible to do partial transfers of funds between 529 beneficiaries within a family but across generations (e.g. parent to child), $15k at a time, to avoid filing gift tax returns like you would if you simply re-titled the entire 529 account to the new beneficiary? Maybe through rollovers? This isn't something I've seen on 529 FAQ pages, but I imagine it's something many people would want to do at some point.
The rule: Change the 529 plan designated beneficiary to a “lower” generation such as children or grandchildren can trigger gift tax or generation-skipping transfer tax.

The good news is that the IRS only requires reporting of gifts if the amount is over 15,000 per year. One individual can give up to this limit to another individual without it being a taxable event or requiring any reporting.
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