529 questions

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Rickito
Posts: 16
Joined: Mon Jan 02, 2023 12:43 am

529 questions

Post by Rickito »

I was speaking with a financial advisor (nice guy but he charges 1% AUM!) during a tour/run at my son’s university (parent’s weekend). He planted in my head the idea of investing in my son’s 529 plan forever which could be a great way to pass down an educational fund to my grandkids. Plus, if I invest in it every year we get a tax deduction in New York State. I just wanted to be sure I was thinking about this correctly. If I invested $5,000/year even when my son is done with college and medical school and depleted the 529 fund (which we are close to doing already) I can keep investing in it, allowing it to grow over 25 + years and he can pass this down to his kids who can reap the educational benefits? Is this feasible even though he’ll be an adult and working himself as a physician in 10 years while I keep adding to his 529 fund? Thanks for your help!
ClaycordJCA
Moderator
Posts: 2332
Joined: Sun Aug 09, 2015 11:19 pm
Location: SF Bay Area

Re: 529 questions

Post by ClaycordJCA »

Since OP has a personal and actionable investment question, this topic is now in the Personal Investments forum.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: 529 questions

Post by mhalley »

Sure, you could do this, plus there is the new 529 to Roth IRA provision you could do.
https://www.forbes.com/sites/kellyphill ... 7940205563
User avatar
Brianmcg321
Posts: 1875
Joined: Mon Jul 15, 2019 8:23 am

Re: 529 questions

Post by Brianmcg321 »

All you would really be doing is changing the beneficiary to another person. You are the owner of the 529 plan. Your son is just currently the beneficiary of it. You can change that at any time.

https://www.savingforcollege.com/articl ... %20website.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
986racer
Posts: 469
Joined: Thu Aug 11, 2016 10:09 am

Re: 529 questions

Post by 986racer »

Wouldn’t changing the beneficiary to a different generation cause a gift tax?

So, you could do the plan but you would be able to only transfer 17k per child per year without filing gift tax forms
986racer
Posts: 469
Joined: Thu Aug 11, 2016 10:09 am

Re: 529 questions

Post by 986racer »

One other thing… I forget who is supposed to file the gift tax form if you transfer over 17k per person per year to a lower generation. I know it used to be the beneficiary but that may have been changed to having the owner do it.
Topic Author
Rickito
Posts: 16
Joined: Mon Jan 02, 2023 12:43 am

Re: 529 questions

Post by Rickito »

Would I have to file a gift tax form if I did not exceed the 17k per year transfer amount? Do 529 accounts from different states vary on this limited transfer of 17k per year if changing beneficiaries?
986racer
Posts: 469
Joined: Thu Aug 11, 2016 10:09 am

Re: 529 questions

Post by 986racer »

Rickito wrote: Sun Mar 26, 2023 9:16 am Would I have to file a gift tax form if I did not exceed the 17k per year transfer amount? Do 529 accounts from different states vary on this limited transfer of 17k per year if changing beneficiaries?
I don’t think that a gift tax form would be required if you stay under the 17k annual exclusion limit.

It may also be possible (others on the board may be able to say with more certainty) to superfund a transfer. I.e., yiou could transfer 85k in one year and treat it as 5 equal annual payments
Post Reply