how to transfer a 529

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prk
Posts: 155
Joined: Wed Jul 09, 2008 1:39 pm

how to transfer a 529

Post by prk »

we have accumulated a 529 plan for our nephew. he will be 18 next year when he starts college. how best to handle this? transfer it to him? transfer it to his parents? keep it ourselves and pay college bills?

we would prefer NOT to keep it, so that we are no dealing with day-to-day stuff. can we transfer it without jeopardizing its tax protected status?

any other down side to turning it over to him or his parents?
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CAsage
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Re: how to transfer a 529

Post by CAsage »

I had a 529s account for my niece. The provider (Vanguard) simply dispersed one (maybe 2) check annually, after confirming her legitimate expenses would exceed that. I divided the approximate balance over a couple years. Mailed check to her with instruction that she retain school receipts just in case. Really, all I wanted was that annual "Wow Thank you Auntie" card. But if you choose, you can name a new owner, which has no tax effect. These days I think you can even use the money for student loans, if you want to make sure he goes first!
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
indexlover
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Joined: Mon May 11, 2015 10:39 am

Re: how to transfer a 529

Post by indexlover »

prk wrote: Fri May 27, 2022 3:36 pm we have accumulated a 529 plan for our nephew. he will be 18 next year when he starts college. how best to handle this? transfer it to him? transfer it to his parents? keep it ourselves and pay college bills?

we would prefer NOT to keep it, so that we are no dealing with day-to-day stuff. can we transfer it without jeopardizing its tax protected status?

any other down side to turning it over to him or his parents?
Not sure what the "dealing with day-to-day stuff" means. All you have to do is go to your 529 provider and pay the school directly for whatever amount for the beneficiary ( Nephew). If you are not going to pay to the school directly but get a check, make sure the $$ is not sent in your name, otherwise you will be sent a 1099-Q with the box checked for #6 ( recipient is not the designated beneficiary) and that could cause some tax headache.
“If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.” - Mr. Buffett - Berkshire Hathaway ’s 2016 annual report.
Topic Author
prk
Posts: 155
Joined: Wed Jul 09, 2008 1:39 pm

Re: how to transfer a 529

Post by prk »

day to day stuff would be monthly rent, books, meal plan, tuition

we prefer his parents handle that

any downside to transfering it to by brother and sinter-in-law's name
SchruteB&B
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Joined: Mon Jul 02, 2018 7:48 am

Re: how to transfer a 529

Post by SchruteB&B »

Generally this can be done, looks like some states and/or certain plans do not permit it:

https://www.savingforcollege.com/compar ... tion_id=78
Pdxnative
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Joined: Sat Nov 07, 2015 1:17 pm

Re: how to transfer a 529

Post by Pdxnative »

If he might be eligible for need-based financial aid at any of the schools he’s considering, I’d hold off doing anything until that’s clarified. Transferring ownership to parents or student could affect that financial aid.
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