A 529 plan is a great way to save for your child's future education expenses. One benefit of this type of college savings account is that it offers flexibility in terms of what you can do with the money. For instance, if your child decides not to go to college or doesn't use all of her plan money, you can transfer the 529 account to another child or beneficiary.
Items you will need
- Recent account statement
- Transfer forms
- New 529 account information
Check with your current 529 plan administrator to make sure your account is eligible for a transfer. Depending on the plan, you might be restricted to one transfer per year. If you've recently transferred money out of the plan, you might have to wait until the next eligibility period.
Open a 529 account for the child you're transferring the money to if you haven't done so already. All 50 states offer at least one 529 plan option and you can enroll in any state's plan, regardless of where you live. Provide your Social Security number and your child's name when choosing a beneficiary for the account.
Contact your current 529 plan administrator and tell him you want to take a distribution from the account. You'll need to fill out a form specifying the account number, the beneficiary's name, how much money you want to withdraw and why. Once the paperwork is processed, you should receive a check or an electronic bank transfer of the funds, depending on your preference.
Complete the transfer paperwork for the new 529 account. Include your name, the beneficiary's name, the account number and your Social Security number. You'll also need a statement from the old 529 plan showing any interest earned on the account.
- If you're not comfortable handling a check, you can ask your new 529 plan administrator to initiate the a direct transfer of the funds on your behalf.
- If the child you transferred the funds to doesn't use them, you can always transfer the money to a 529 plan for yourself or another qualified beneficiary.
- Funds from the old 529 plan must be deposited into the new account within 60 days to avoid a tax penalty.
- If your child uses the transferred 529 plan funds for any purpose other than qualified education expenses, you might be subject to a tax penalty.
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