Answers to Questions about Opening a 529 Plan

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By Mark Kantrowitz

July 17, 2020

During our webinar about How to Reach Your College Savings Goals with a 529 Plan, participants asked dozens of questions. Here are the answers to questions about opening a 529 plan.

Is there an age limit to start a 529 plan?

There is no age limit to opening a 529 plan. You can even open a 529 plan before the child is born. You can continue contributing to a 529 plan indefinitely, until the account balance reaches the state’s aggregate limit.

This is in contrast with a Coverdell Education Savings Account, where contributions must stop when the beneficiary reaches age 18 and the account must be fully distributed by age 30 plus 30 days. These age limits are waived for special needs beneficiaries. 

Can I open a 529 plan account even though my daughter is not pregnant yet? I will be the grandma.

Yes. You will need to open the 529 plan with yourself as the beneficiary and then change the beneficiary to the grandchild after they are born and have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). 529 plans allow the beneficiary to be changed to a member of the family of the current beneficiary. 

Can you open a 529 for yourself?

Yes. You can open a 529 plan with yourself as both the account owner and beneficiary. You can use this 529 plan to pay for your own education, including continuing education classes. 

You can also later decide to change the beneficiary to a member of your family. Some parents of unborn children will open a 529 plan in their own name, to get a head start on saving for their child’s college education, and change the beneficiary to the child after the child is born.

Can you have both a Coverdell education savings account and a 529 college savings plan for the same child?

A beneficiary can have both a 529 plan and a Coverdell education savings account. They can even have multiple 529 plans and Coverdell education savings accounts. Parents can make contributions to both a 529 plan and a Coverdell education savings account for the same beneficiary in the same year. 

The annual gift tax exclusion applies to the combined contributions to 529 plans and Coverdell education savings accounts from the same contributor for the same beneficiary in the same year, with an exception for superfunding. If the total contributions from the contributor to the beneficiary exceed the annual gift tax exclusion, the contributor can elect to use 5-year gift-tax averaging to treat the contribution to the 529 plan as occurring over a 5-year period. Otherwise, the excess contribution will count against the contributor’s lifetime gift tax exemption or the contribution will be required to pay gift taxes on the contribution.  

A good place to start:

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