A 529 education savings plan is more than just a smart way to save for future education expenses—it’s also designed with flexibility in mind. One of the key features of a 529 plan is the ability to change the beneficiary on the account to another relative of the beneficiary. This can be particularly helpful if the original beneficiary receives a scholarship, doesn’t use all the funds in the account, or decides to pursue less expensive education options like an apprenticeship or trade school. 

Whether you're planning for a sibling, cousin, or even yourself, updating the beneficiary is a straightforward process that helps keep your education goals adaptable. In this article, we’ll walk through when and how to make the switch, what to consider before doing so, and how to ensure the funds remain eligible for tax-free use.

529 plans are designed on the principle of one owner/one beneficiary, with the IRS describing a designated beneficiary as “the student or future student for whom the plan is intended to provide benefits.” 

So, for example, if you set up an account for your oldest child and then your family grows, you can easily create a new account for each additional child. Beneficiaries can also include stepchildren, grandchildren, nieces, nephews, and yourself.  You do not need to be related to the beneficiary. As the plan owner, you can set up many accounts, but each account can have only one beneficiary at a time. 

Suppose your oldest child receives several large scholarships or decides not to attend college. They may not need the full amount invested in the account. In that case, you can change the beneficiary on the 529 account to another qualifying family member. A qualifying family member includes anyone who is a family member of the original beneficiary, this includes:

• Spouse

• Son, daughter, stepchild, foster child, adopted child, or a descendant 

• Son-in-law, daughter-in-law

• Siblings or step-siblings

• Brother-in-law, sister-in-law

• Father-in-law, mother-in-law

• Father or mother or ancestor of either, stepmother, stepfather

• Aunt, uncle, or their spouse

• Niece, nephew, or their spouse

• First cousin or their spouse

The straightforward process usually takes just a few minutes, and no tax penalties are involved when you change the beneficiary to another qualifying family member.  You can also move funds from the 529 plan of one child into a sibling’s existing 529 account without facing penalties.

The process is simple once you decide to change an account’s beneficiary. You can access The Education Plan’s change forms under account management, here. You can also request that forms be mailed to you and receive assistance completing your forms by calling 877-337-5268.

You’ll need to provide the following information to make the change:

• the 529 plan account number

• the owner’s name and telephone number

• the current and new beneficiary’s name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). 

You’ll also need to include the amount of the funds you’d like to transfer to the new beneficiary and your signature as the account owner. 

If you have any questions about changing the beneficiary on your account with The Education Plan, you can contact our team for assistance. 

If you haven’t opened a tax-advantaged 529 education savings account yet, you can get started in just 15 minutes.