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529 Plans: Eligibility

Anyone can constitute and contribute to a 529 plan on behalf of a designated beneficiary. This petties that relatives, family, friends – even the designated beneficiary him- or herself – can introduce a 529 plan.

But the rules do vary. For instance, some 529 layouts limit participation to residents of the state while others allow anyone to participate, regardless of the single’s state of residence. Individuals should check with the financial academy or educational institution providing the plan to determine the eligibility requirements for confirming an account under that particular plan.

Some 529 scenarios may have established enrollment periods before which new accounts be compelled be opened.

Age and Income Requirements

Unlike Coverdell ESA programs, 529 aims do not have income restrictions. Some 529 plans – although there are identical few – place age restrictions on designated beneficiaries. Individuals must check with the envisage provider and the plan documents to determine whether there are any restrictions that credit to the 529 plan they want to establish for the designated beneficiary.

The investment way outs available under the plan may be determined by the age of the beneficiary, and are often automatically harmonized as the beneficiary’s age moves from one range to another. For prepaid tuition programs, the outlay per credit may be determined by the number of years that the designated beneficiary has liberal before he or she reaches a certain age- usually the age that students typically upon attending college.

Changing the Designated Beneficiary

Like the ESA, the 529 system allows the designated beneficiary to be changed to a qualified family member who congregates any age requirements as determined by the plan.

For the purpose of determining who can become a designated beneficiary of a 529 design, a qualified family member includes the following:

  • The designated beneficiary’s spouse
  • The represented beneficiary’s son or daughter or descendant of the beneficiary’s son or daughter
  • The designated beneficiary’s stepson or stepdaughter
  • The specified beneficiary’s brother, sister, stepbrother or stepsister
  • The designated beneficiary’s parson or mother, or ancestor of either parent
  • The designated beneficiary’s stepfather or stepmother
  • The named beneficiary’s niece or nephew
  • The designated beneficiary’s aunt or uncle
  • The spouse of any living soul listed above, including the beneficiary’s son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law
  • Any mortal for whom the home of the designated beneficiary is his or her primary home for the entire tax year The called beneficiary’s first cousin

Amounts that are rolled over to a new deputed beneficiary must be rolled over within 60 days of being distributed. Alternatively, the modify can be made by changing the name and tax identification number on the 529 account to that of the new denoted beneficiary. (For related reading, see How and When to Switch Your 529 Contemplate.

529 Plans: Contributions

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