OneShare Investments

529 Answers -- Get the FYI on our FAQs

Who can start a 529 plan?

Any U.S. resident who is 18 years or older and has a Social Security or Tax ID number can open a 529 college savings account, regardless of income.

Who can contribute to a 529 plan?

Just about anyone can contribute to a 529 college savings plan — parents, grandparents, friends and even neighbors. However, you must be the owner of the account to receive additional tax benefits available in some states.

How much can I contribute to a 529 plan?

The good news is 529 plans have generous allowable contribution amounts. If you are an owner you can make a tax-free gift of $13,000 per year or $26,000 if you are married and filing jointly. Also, you can elect to use five years of the annual gift tax exclusion all in one year, allowing you to make a tax free gift of $65,000 or $130,000 if filing jointly.

Who should be the owner of the account?

Typically, a parent, a relative, or family friend is the owner of the account. Since the owner names the beneficiary and decides when withdrawals will be made, it's extremely important to give this responsibility to a trusted adult.

Once the account is established, who controls withdrawals?

On behalf of the beneficiary, the owner makes all the decisions about the timing and amount of withdrawals.

Can a child be the beneficiary of more than one account?

Absolutely. Also, family members can establish additional accounts for your child, although it might be better to have them contribute to your existing plan. Talk with your Parent Investment Specialist to find out if managing multiple accounts offers any additional benefits over simply establishing one account for your child.

Can I change the beneficiary of the account?

Yes, you can change the beneficiary of a 529 account to another family member. However, designating a beneficiary who is not a family member may trigger a taxable event, which could include a penalty, gift tax, or both.

In case I want to change the beneficiary on the account without incurring a penalty, who would qualify as a family member?

• Natural or legally adopted children
• Parents or ancestors of parents
• Siblings or stepsiblings
• Stepchildren
• Stepparents
• First cousins
• Nieces or nephews
• Aunts or uncles

What if I open a 529 account and my child doesn't go to college?

If your child does not enroll in an eligible educational institution, you can choose another beneficiary for the plan or you can use the proceeds of the account for non-qualified expenses, which are not related to education. Keep in mind that earnings are subject to state and federal tax plus a 10% federal tax penalty. Not sure what an eligible educational institution is? Ask your Parent Investment Specialist for a list.

Do I have to be a resident of the state to invest in a state-sponsored plan?

Not at all. You can participate in any state’s plan, although you must be a resident of the state to qualify for certain state tax benefits. Not all states have tax benefits. Ask your Parent Investment Specialist for details.

For more info and answers, call 1.800.770.8057 to speak one-on-one with a Parent Investment Specialist.