Grandparent/Trust -owned 529 plan

Paying for College
1

<p>I know this has been covered quite a few times, but I want to make sure I don't do something wrong.</p>

<p>My son is beneficiary to a 529 plan owned by a trust (setup by deceased grandparent). He is going to be a freshman next year (2013-14). I know FAFSA does not ask about 529's owned by grandparents (only parents/students).</p>

<p>I am filling out a financial aid application for MICA (art school). They ask: </p>

<p>LIST THE SOURCES AND AMOUNTS OF OUTSIDE ASSISTANCE (do not list MICA-sponsored aid) - that you know you will receive for the 2013-14 academic year.</p>

<p>There is a spot for - 529 College savings plan - and "Who owns the plan" and "$ amount for 2013-14 that you know you will receive".</p>

<p>Now, technically, the grandparents could say that they elect to distribute $0 from the 529 plan for next year. Or my son could be unaware of their plans - since neither he nor us (parents) are plan-owners. The money is completely at the discretion of the trustees - and he/we have no control over it.</p>

<p>Do we have to report this on the form?</p>

<p>The problem is of course, that if he does get a distribution, it will show up <em>nextyear</em> as untaxed income, and then the school will know that there exists a 529 plan somewhere. If he gets a distribution after not 'declaring it', should he write a letter saying he didn't know he would be getting it?</p>

<p>What to do?
Thanks,
misty</p>

2

<p>I think you should ask the school.</p>

3

<p>Well, if it’s held in a trust, does the trust document specify how it is to be distributed? If so, then you know the answer to "how much for 2013-14? Who is the trustee on this trust? Can the trust change ownership on the 529 to a parent? Any other trust rules or restrictions you know of?</p>

<p>As you know, grandparent 529 plans have had some discussion on CC - I don’t recall any with the 529 owned by a trust. Obviously you DO know about the trust but maybe not about how much will be distributed for next school year. You could estimate at 1/4 or whatever, or maybe you need to discuss this with the trustee before filling out the aid application. I think pretending it doesn’t exist (or that you don’t know about it) would be both dishonest and possibly come back to bite you.</p>

4

<p>I would discuss with the trustee, and then with the school. I don’t think it is a big problem if there is an “unexpected” distribution and long as the school is told later - that would be no different than if the student has applied to a number of scholarships, or is awarded scholarships by their HS in May - long after the aid package is awarded.</p>

<p>They want to know what distributions are guaranteed, not what might be available.</p>