Does anyone know about the logistics of transferring ownership of a 529? Are there tax implications? Other implications? Are there rules about who can be the new owner? (e.g. does it have to be a relative of the beneficiary?)
I believe state laws vary on ownership change. Some states consider it to be a nonqualified distribution.
I looked into this a little – my mom owns a 529, my kid is the beneficiary. What we did is we filled out a POA form from the 529 company (edvest in our case) so that I legally have the power to do things. And then I help my mom manage the distributions through the website as needed.
I need to make a note to check and make sure she’s designated a reasonable person as the successor (hopefully me, but just someone I can work with would be fine) in case she passes away (not currently on the horizon, but unexpected things happen) before the graduation.
I vaguely recall seeing that there were tax implications in ownership transferring (plus she wanted to keep putting money in, and who am I to tell her to stop, right?) – but as I am the parent of the beneficiary and the daughter of the owner, there wasn’t any sort of “you can’t transfer to that person” rule that I ran into in my research. Seeing as anyone can open a 529 and name another person a beneficiary – so long as the person opening the account has all the relevant SSN type info – I wouldn’t think there’d be restrictions on “transferring” ownership. Edvest essentially handles it as “new account is opened” + “funds transferred from old account to new account” steps, and the 2nd one “can” have tax implications, so I just didn’t poke any deeper into that.
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@BelknapPoint can likely give some advice.
My understanding is you need to contact the 529 folks and see what is allowed by the policy and your state.
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Some 529 plans allow transferring ownership of an account, and some do not. You will need to check with your particular plan’s administrator to get the answer on this. The only tax implication that I can think of with an account ownership change has to do with possible complications associated with state tax deductions. This depends on the state tax laws that apply to the old and new owners. For those plans that allow ownership change, I have not heard of any plan restrictions on who can be a new owner.
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