<p>As I prepare to fill out financial aid forms for my HS senior son I realize we have about $4000 in a 529 account intended for his older brother. Older brother chose to join the military right out of HS and defer college until after his enlistment. The account is in my husband's name with older brother as beneficiary, but it is mostly money that came as gifts to this older child from relatives at birthdays and Christmas over the years, plus some we were able to contribute in "better years." This older son is no longer our dependent for taxes or a member of our household so he won't be listed on financial aid forms as a child for whom we have set aside college funds. Yet I feel it is older son's money. What we will probably do is spend this money for younger son's college, then reimburse older son since he will have the GI Bill for his schooling. (We also have about $4000 in a 529 account for this younger son.)
How will the schools using the Profile view this? Is there a place to put it in comments?
Any advice is appreciated. BTW we are low income and qualify for simplified needs test on FAFSA.</p>
<p>When you fill out Profile, you’ll be asked to list the amount you have saved in all 529 accounts, regardless of beneficiary. The reason for this is that 529s are designed to allow for beneficiaries to be easily changed, and so they’re seen as “family” resources rather than funds owned by a specific student. So sibling 529s are reported on Profile. There’s a place for comments on the Profile form; you can indicate that some of the 529 funds are designated for the older sibling. Schools may or may not take this into account.</p>
<p>Will the older child ever be going to college? If so, you could look into gifting the 529 to him since he’s presumably of legal age (18 or 21, depending on the state). That would involve taking your husband’s name off the account since your older son would no longer need to have a named custodian. For minors, accounts such as 529s and UTMAs must have a named custodian because they cannot legally own financial accounts. Ask your financial institution what would be involved in transferring title from husband-as-custodian to son-as-custodian on the 529. Once your older son owns the 529 outright, it would not be reported on your younger son’s Profile.</p>
<p>If your older son won’t be going to college, then your plan of using his 529 for the younger son and reimbursing your older son sounds perfectly reasonable.</p>
<p>Thank you. I hadn’t thought about transferring ownership of the account. We do expect our older son to complete his education, but I know things don’t always go as planned. He earned his AA while in high school and is an excellent student. Every now and then he talks about re-enlisting and going for a 20 year military career. Knowing that he’ll have the GI Bill benefits I want to explore all our options.</p>
<p>As I understand you can keep the 529 plan for a long time, so your son can use it 15 years from now if he needs it for qualified educational expenses.</p>
<p>You can also change it to the name of your grand children if necessary. In other words, if you elder son is going to get tuition reimbursement, and get a degree without having to use the 529, you can transfer it in the name of his child when the child is born.</p>
<p>You can also withdraw the money but you will pay a penalty plus taxes. </p>
<p>So you have other options including the one suggested by vballmom</p>