529 question

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Topic Author
deltaneutral83
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Joined: Tue Mar 07, 2017 3:25 pm

529 question

Post by deltaneutral83 »

Couple has child # 1, with 529, child #1 as beneficiary. If couple plans to have child #2, starts 529 in parent name, with parent as beneficiary, with intent to name child 2 as beneficiary when the time comes. As time goes on, child #2 doesn't happen, plans change, etc. can the second 529 be moved in kind to child #1's 529? I guess what I'm getting at is are 529 balances able to be moved in kind amongst siblings? Perhaps child #1 doesn't go to college or goes to a cheaper college, can balance be moved to child #2 18 years later in kind?
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retired@50
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Re: 529 question

Post by retired@50 »

If you can't combine the 529 accounts, you could always make child #1 the beneficiary of BOTH accounts.
Seems like this would provide a similar result.

Regards,
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Flyer24
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Joined: Sun Apr 08, 2018 4:21 pm

Re: 529 question

Post by Flyer24 »

You can either do a plan-to-plan rollover or just change the beneficiary.
marcopolo
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Re: 529 question

Post by marcopolo »

deltaneutral83 wrote: Sat Sep 18, 2021 10:46 am Couple has child # 1, with 529, child #1 as beneficiary. If couple plans to have child #2, starts 529 in parent name, with parent as beneficiary, with intent to name child 2 as beneficiary when the time comes. As time goes on, child #2 doesn't happen, plans change, etc. can the second 529 be moved in kind to child #1's 529? I guess what I'm getting at is are 529 balances able to be moved in kind amongst siblings? Perhaps child #1 doesn't go to college or goes to a cheaper college, can balance be moved to child #2 18 years later in kind?

Your set up and your question are about two different scenarios.

Change of beneficiaries between siblings can be done by either changing beneficiary on existing account, or transferring in kind between accounts. There are no tax consequences.

Changing beneficiary from a parent to a child is different. Changing beneficiary to a lower generation is subject to gift tax rules. Does not mean taxes would be due, but does require planning, and perhaps additional tax form filling.

At least that is my understanding, as I have not done it yet.
But, it is likely in my future when eventually transferring left over funds from child to grandchild.
Once in a while you get shown the light, in the strangest of places if you look at it right.
j.click
Posts: 197
Joined: Thu Jul 24, 2014 6:11 pm

Re: 529 question

Post by j.click »

Marcopolo is correct. Changing beneficiaries between generations is subject to regular gift tax provisions. Anything under $15K per year does not need be reported, anything over $15K per year does and applies to one's lifetime exclusion. We finally funded our grands' 529 with $15K in Dec. and another $15K in Jan. as a workaround.
Topic Author
deltaneutral83
Posts: 2455
Joined: Tue Mar 07, 2017 3:25 pm

Re: 529 question

Post by deltaneutral83 »

Thank you all. Seems like it's wise to fund Child #1 as much as possible and then move any monies meant for child #2 when the child is born in kind with no tax consequences even if it's over $15k in a year that is moved in kind from #1 to #2.
dukeblue219
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Joined: Fri Jan 29, 2016 11:40 am

Re: 529 question

Post by dukeblue219 »

It's not uncommon to do this the other way around, too - parents start a 529 with themselves as beneficiaries before any kids are born.
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