Helpful tips

Can grandparents set up a 529 plan?

Can grandparents set up a 529 plan?

Yes, you most certainly can open a 529 account as a grandparent — you generally can name anyone as a beneficiary of a 529 account.

Can you use 529 for spouse?

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.

Can grandparents take tax deduction for 529?

Yes, grandparents can claim the deduction for contributing to a 529 if they live in one of the 34 states that offer a state income tax deduction for 529 college-savings plan contributions. The only question is whether you must own the account or whether you can contribute to one set up by, say, the child’s parents.

How long can a 529 account stay open?

529 plans do not have withdrawal deadlines. A 529 plan account owner is not required to take a distribution when the beneficiary reaches a certain age or within a specified number of years after high school graduation, and funds can remain in the 529 plan account indefinitely.

Are there any college savings plans for grandparents?

There are a number of strategies for grandparents to help, including the 3 tax-advantaged savings options below. Consider how they might impact the whole family: grandparents, the grandchildren, and you. The 529 college savings plan offers an appealing combination of tax advantages, control, flexibility, and minimal impact on student aid.

Can a 529 plan be set up by a grandparent?

Assets in a 529 set up by a grandparent are considered the grandparent’s assets for Medicaid means testing purposes. The 529 plan account balance would have to be spent on your care before Medicaid payments could begin.

Can a grandparent contribute to a Custodial Savings Account?

A parent or grandparent can use a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account (i.e., “custodial” account) to save for a child, but the child named on the account would gain control once they reach a specified age. So, you would need to be ready to give up control of the money.

How to set up college fund for your grandchildren, even?

You want your grandchildren to feel loved and supported by you, no matter where they fall in the birth order. Imagine being able to give each one of them a gift of textbooks at the start of each semester, a laptop after they receive their acceptance letters or a calculator or special tool they need for their trade.

When to use Grandma and Grandpa’s money for college?

In those cases, grandparents should wait as long as possible before taking a distribution. “Use Grandma and Grandpa’s money for the last year of college,” Mingone says. For example, a student files his or her last FASFA form prior to the last year of college.

Can a 529 account be opened by a grandparent?

While many cash-strapped parents appreciate the assistance from grandparents in financing their children’s education, families should be aware of a potential pitfall to grandparent-owned 529 accounts. A 529 account owned by a grandparent is not reported on the Free Application for Federal Student Aid form.

What happens if you put money into a grandparent’s account?

A problem arises when funds from a grandparent-owned account are distributed for a grandchild’s education expenses. At that point, the funds are considered student-owned, and reduce the following year’s financial aid award by 20 percent.