<p>Okay, when the student is a minor, mom and dad set up the 529. Theyre the owners (or account holders), and the kid is the beneficiary. So far, so good, and if it stays that way, its a parental asset for purposes of financial aid.</p>
<p>But the kid turns 18, and ownership of the account is transferred to him. So, he is now both account holder and beneficiary. Assuming the parents are still alive, is the 529 still a parent asset for purposes of FA?</p>
<p>It should be - all the FA forms are pretty clear that 529s should be treated as parental assets. But, still, if the kids the account holder, does that change things?</p>
<p>No - 529 account ownership does not change based simply on the student/beneficiary turning 18.</p>
<p>If a parent establishes a 529 account with parent money and names a child as beneficiary, the parent is and will remain the owner and can make distributions from the account for the named beneficiary as the parent sees fit. The parent/owner can name a new beneficiary at any time, even him/herself. If a child is the beneficiary, the account is treated by FAFSA as a parent asset.</p>
<p>If a parent establishes a 529 account with a child’s money, the child is the account owner and must be the beneficiary; the parent acts as custodian and controls the account until the child reaches the designated age under state UGMA/UTMA laws and then the child takes control of the account. While the parent controls, the funds in the account must be used for the benefit of the child. Even though the child is the account owner and the account was created with the child’s assets, the account is still given the more favorable treatment under FAFSA as a parental asset.</p>