06 May Can Mom use my kids’ 529 plans?
Q. I’ve been saving for my kids’ college in 529 plans. My mom, who is 71, has decided she’s going back to college. Can I somehow use some of the 529 money for her?
A. One of the reasons 529 plans are so popular is because they’re more flexible than other tax-advantaged accounts.
Generally, family members can be made the beneficiary of a 529 account.
“You can even establish an account with yourself as the named beneficiary,” said Alan Meckler, a certified financial planner with Cornerstone Financial Group in Succasunna. “The only requirement is that the beneficiary must be a U.S. citizen or a resident alien, and must have a Social Security number or federal tax identification number.”
You can change the beneficiary to: Natural or legally adopted children, parents or ancestors of parents, siblings or step-siblings, step-children, step-parents, first cousins, nieces or nephews, or aunts or uncles.
“In addition, the spouse of the beneficiary or the spouse of any of those listed above also qualifies as a family member of the beneficiary,” Meckler said.
In most cases, beneficiary changes are very common amongst siblings, said Michael Pirrello, a certified financial planner with Mill Ridge Wealth Management in Chester.
“For example, an older sibling does not utilize all the savings in their 529 account, so the parents can then utilize the leftover balance for education expenses for younger children by changing the beneficiary,” he said.
In your example, it is possible to use your children’s’ 529 savings for your mother’s higher education expenses, Pirrello said.
“Contact your 529 plan custodian to obtain the paperwork necessary to change the beneficiary designations and help sign mom up for classes,” he said.
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This story was first posted in May 2015.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.