Can 529 be used for cousins?
Withdrawals from a 529 account for qualified higher education expenses are free from federal (and possibly state and/or local) income taxes. It’s as simple as changing the name of the account’s beneficiary to someone else in the beneficiary’s family — one of your other children, or a first cousin, perhaps.
Who are eligible family members for 529?
According to the IRS, a member of a 529 plan beneficiary’s family includes the beneficiary’s:
- Spouse.
- Son, daughter, stepchild, foster child, adopted child or a descendant.
- Son-in-law, daughter-in-law.
- Siblings or step-siblings.
- Brother-in-law, sister-in-law.
- Father-in-law, mother-in-law.
Can 529 be used for non family member?
All 529 plans accept third-party contributions, regardless of who owns the account. That means anyone, including grandparents, aunts, uncles or even friends can help a child save for college. You do not have to be a family member of the beneficiary to contribute to their 529 plan.
Who should be the beneficiary of a 529 plan?
There are two primary participants in a 529 plan: the account owner and the beneficiary. Typically, the parent is the account owner and makes contributions to the plan. The child who will eventually receive money from the plan to pay for high school or college is the beneficiary.
Who are the family members of a 529 plan?
According to the IRS, a member of a 529 plan beneficiary’s family includes the beneficiary’s: Spouse. Son, daughter, stepchild, foster child, adopted child or a descendant. Son-in-law, daughter-in-law.
Can a 529 plan change the beneficiary to a sibling?
Another option is to change the beneficiary on the 529 plan account. 529 plans allow the account owner to change the beneficiary to a qualifying family member of the current beneficiary without tax consequences. This includes the beneficiary’s: Brothers and sisters; Stepbrothers and stepsisters
Can you transfer money from one 529 to another?
You have the option of changing the designated beneficiary on an existing account or establishing a new 529 plan, which will receive the transfer on behalf of your new beneficiary. If you’re taking money from one 529 plan and moving it into another, it’s best to have the current plan administrator complete the transaction for you.
What are the rules for non qualified 529 withdrawals?
While 529 withdrawal rules are fixed, there are ways to make non-qualified withdrawals without getting hit with that 10% penalty; these include: The student beneficiary receives a scholarship. The student beneficiary dies. The student beneficiary enrolls in a U.S. service academy.
