Change Beneficiary on 529: The Ultimate Guide (5,000 Words)

Introduction

A 529 plan is a tax-advantaged savings account designed to help families save for future education expenses. One of the most important aspects of a 529 plan is the beneficiary designation. The beneficiary is the person who will receive the funds in the account when the owner dies or becomes incapacitated.

Why Change the Beneficiary on a 529 Plan?

There are several reasons why you may need to change the beneficiary on a 529 plan.

• The original beneficiary is no longer eligible for the funds. This could happen if the beneficiary dies, changes their mind about attending college, or receives a scholarship that covers all of their expenses.
• You want to add a new beneficiary to the account. This could be a new child or grandchild, or a friend or family member who is helping to pay for the beneficiary's education.
• You want to change the percentage of funds that each beneficiary will receive. This could be necessary if you have multiple beneficiaries and you want to ensure that they each receive a fair share of the funds.

How to Change the Beneficiary on a 529 Plan

The process for changing the beneficiary on a 529 plan varies depending on the plan provider. However, the general steps are as follows:

1. Contact the plan provider. You can usually do this by phone, email, or online.
2. Request a change of beneficiary form. The plan provider will send you a form that you need to complete and return.
3. Complete the form. The form will ask for the following information:
   • The old beneficiary's name and address
   • The new beneficiary's name and address
   • The percentage of funds that each beneficiary will receive
4. Return the form. You can usually return the form by mail, fax, or online.

Tax Implications of Changing the Beneficiary on a 529 Plan

Changing the beneficiary on a 529 plan does not usually trigger any tax consequences. However, there are a few exceptions to this rule.

• If you change the beneficiary to someone who is not a qualified beneficiary, the earnings in the account may be subject to income tax and a 10% penalty.
• If you change the beneficiary to a non-family member, the gift tax may apply.

FAQs About Changing the Beneficiary on a 529 Plan

Here are some of the most frequently asked questions about changing the beneficiary on a 529 plan:

• Can I change the beneficiary on a 529 plan more than once? Yes, you can change the beneficiary as many times as you need to.
• What happens if I die without changing the beneficiary on my 529 plan? The funds in the account will be distributed to your estate.
• Can I change the beneficiary on a 529 plan online? Some plan providers allow you to change the beneficiary online. However, you may need to contact the plan provider directly if you want to make other changes to the account.

Conclusion

Changing the beneficiary on a 529 plan is a relatively simple process. However, it is important to understand the tax implications of changing the beneficiary before you do so. If you have any questions about changing the beneficiary on a 529 plan, you should contact the plan provider.