The 529 College Savings plan is an incredible planning tool. As a parent who has actually used these accounts to pay for my kids college, I have seen first hand how useful they can be. Grandparents will often ask if they should contribute to their grandkids existing plan or should they start their own.
There are advantages to grandparents starting a 529 plan for their grandchildren.
- The contributions are removed from the estate, but the grandparent maintains control.
- You can gift up to $75,000 (or $150,000 for married filing jointly) in a single year without gift tax. And you can do this for as many beneficiaries as you wish!
- Tax-deferral with no time, age, or income limits for the successor owner upon inheritance. No required minimum distributions either.
- Grandparent owned 529 plans are not disclosed when filing for financial aid while parent-owned 529 plans must be disclosed.
If this interests you, give us a call to see if a 529 College Savings Plan makes sense for your situation.