529's

<p>Yes transfer is allowed. It was very easy to transfer between my two different 529 accounts with the same financial institution. I just log in and make an online transfer between the two accounts. I would transfer first before taking out money to pay for the cost of different beneficiary.</p>

<p>Really? So we can take money from our middle son’s 529 and use it for our son who’ll be going to college in the fall? I’m not even sure my middle son will end up going to college as he has a lot of special learning needs. Maybe we need to take a good look at this option.</p>

<p>I think the main reason for the transfer provision is just that. If the beneficiary is unable or elect not to go to college for whatever reasons (like death or serious illness) or does not need the money for some reasons (like full scholarship), the money can be transfered to a different beneficiary. I think it is quite flexible, the other beneficiary does not have to be directly related siblings, it can be cousins or in-laws and so on. Please make sure you know the exact rules before doing so, I am definitely not an expert.</p>

<p>Yes, you should be able to transfer funds fairly easily between siblings. Doesn’t even have to be siblings. We are planning on using D’s 529 and then when the money runs out, use the money from S’s 529.</p>

<p>We have ours at Fidelity. Was a big pain getting them to send a check directly to the college - they do offer this option, but the check didn’t get there for a long time. We had to cancel the check and have a new one reissued. It took over a month for the money to reach the school. When I spoke to the customer service person at Fidelity, I was told that the system is too unreliable (it is outsourced) - I should really ask for the money to be transferred to my account and then pay the school !</p>

<p>Anyone know what kind of documentation is needed for taxes for these 529 withdrawals?</p>

<p>You can even transfer to grand children. </p>

<p>I have two 529 plans. The person at Fidelity advised me not to add anything more to my elder S’s 529 (who is already in college) but instead contribute to the younger one. He said that if the elder one wants to go the grad school, take it from the younger one’s 529 and continue to add to the younger one’s plan. His advice was try and use it up, but if something was left over, keep the plan and transfer it over to the grand kids (when they come). </p>

<p>Thanks for the tip with Fidelity, I just called them today to set up the direct pay and did not realize they have problems. May be I should call them again tomorrow.</p>

<p>Also, if all the money is not needed due to a scholarship, it can be withdrawn by the beneficiary penalty-free. Taxes are owed on the earnings portion though.</p>

<p>People talked about spending down the 529 account so they qualify for more financial aid. A 529 counts as a parent asset. Therefore, it has limited impact upon financial aid. The main thing is to minimize assets held in the child’s name. </p>

<p>I have a PA. 529 account that is tied to Sage Tuition Rewards. It automatically makes a student eligible for substantial guaranteed scholarships to many private colleges.</p>

<p>^I wouldn’t say minimal if the fund is large,</p>

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<p>Yes that is true, but that is the only exception. Other than offsetting for scholarships, you have to pay a penalty on the interest only, not on the contributions.</p>

<p>*"Federal law imposes a 10% penalty on earnings for nonqualified distributions beginning in 2002. The penalty is not assessed on principal. An exception to the penalty can be claimed if you terminate the account because the beneficiary has died or is disabled, or if you withdraw funds not needed for college because the beneficiary has received a scholarship.</p>

<p>You can change the beneficiary to another qualifying family member at any time in order to keep the account going and avoid (or at least delay) taking nonqualified withdrawals when the original beneficiary doesn’t need those funds."*</p>

<p>Not happy to hear that about Fidelity; thats the one we haven’t hit yet (have been using other ones first)…</p>

<p>You would think since they are one of the “original” 529’s they could have figured out the glitches by now?</p>

<p>I guess if you want it paid directly to the school, you could request the payment earlier in the semester for the following semester…will have to explore that option</p>

<p>Good thing I saw the info about Fidelity…and good thing that I’m using a different account to pay next week’s bill.</p>

<p>What gets documented when a withdrawal is made? Do you get a form and then declare that you used the funds for education expenses on your tax return? Just wondering how this works.</p>

<p>You should receive a 1098-Q form from your 529 plan showing the withdrawals you made.</p>