529 Savings Account Transfers

529 Savings Account Transfers
Gray Easterling

Fifty years ago, I graduated from Louisiana Tech. I am still working, so I guess that means one of two things. First, I must love my work, which I do. Second, I must not want to depend on my retirement savings to maintain my current lifestyle. I think it is a combination of the two, but mostly, I really do enjoy coming to work every (at least, almost every) day. When I graduated, we still had the draft to worry about, and, like many of my peers, it captured me. The good news is that I returned home safe and sound; the bad news is that several of my friends did not. Should we still have the draft? I am not sure, but I do believe that some form of “service to country” for every high school or college graduate would be helpful to the country and to the individual. Hope you remembered the veterans on Memorial Day.


Now, back to the topic. In the May 7 Wall Street Journal, there was an article on 529 plans that contained some good info. One of the positive aspects of a 529 plan is that you can change beneficiaries of the benefits if, for some reason, the original designee does not attend college, trade school, etc., as long as the new beneficiary is a direct relative of the original beneficiary. You do this without transferring accounts by submitting the request in writing, using a transfer/rollover document supplied by the plan sponsor. It may also be possible to transfer ownership from a grandparent to a parent, or establish a successor owner in the event of an original owner’s death. Check with your tax advisor to be sure no tax surprises pop up. Here is something I did not realize: money can be transferred from a qualified U.S. savings bond into a 529 plan. The bond must be a Series EE bond issues after 1989 or a Series I bond individually owned for at least 24 years. You can also move funds in a UGMA (gift to minors) account into a 529 plan.


A related topic is timing of distributions from a 529 plan owned by a grandparent. This could be important for a student applying for financial aid, since a family’s expected financial contribution—a calculation of how much a family can afford to pay toward college expenses—comes into play. Parent-owned plans count toward the family contribution formula while grandparent-owned plans do not, until withdrawals to pay for college begin. At that point, the money is considered income to the student, which means the college expects 50% of the 529 proceeds to be used to pay for school. For a variety of reasons which a college financial counselor could probably explain, grandparents should probably delay funding college from a 529 plan until the second half of a college experience, if possible, because of the effect on college financial aid calculations.


I attended a memorial service for the father of a family friend last month and it included a hymn with these uplifting words: “Joyful, joyful, we adore thee, God of glory, Lord of love; hearts unfold like flowers before thee, opening to the sun above. Melt the clouds of sin and sadness; drive the dark of doubt away. Giver of immortal gladness, fill us with the light of day! Thou art giving and forgiving, ever blessing, ever blest, well-spring of the joy of living, ocean depth of happy rest. Thou our Father, Christ our brother, all who live in love are thine; teach us how to love each other, lift us to the joy divine.” I pray that you might experience God’s peace and love this day, absorbing it into your very being and being a good and faithful witness this day and forever.


Although this information has been gathered from sources believed to be reliable, it cannot be guaranteed.  This material is intended for informational purposes only and should not be construed or acted upon as individualized tax, legal or investment advice.  FSC Securities Corporation does not offer tax or legal advice.  The views expressed are not necessarily the opinion of FSC Securities Corporation. Financial Solutions Group is a marketing name.  Financial Solutions Group is located at 128 Versailles Blvd, Alexandria, LA  71301.  We can be reached at (318) 448-3201. Securities, insurance and advisory services offered through FSC Securities Corporation, member FINRA/SIPC.