How to Change the Beneficiary on Your 529 Account

How to Change the Beneficiary on Your 529 Account

How to Change the Beneficiary on Your 529 Account

 
 

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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.

Plan Adjustments Are Easy

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.

How to Change Your Beneficiary

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. 

Begin Investing in Your Family’s Future Education Today

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

 

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For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

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