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Tax Gurus--START Plan (529) Transfer
Posted on 6/21/17 at 3:18 pm
Posted on 6/21/17 at 3:18 pm
My parents have a LA START acct with me as the beneficiary. I didn't use all of the money, so they'd like to give it to my daughter for her college fund. START won't let me open an account for my daughter and directly transfer from my parents' fund with me as beneficiary to my fund with my daughter as beneficiary. I would like to be the owner of the acct with my daughter's money. Could my parents withdraw the money from their account and donate it to my new account for my daughter (either with start or a vanguard 529) without paying a tax penalty?
6
Posted on 6/21/17 at 4:28 pm to tight lines
I think they either have to get the funds out and pay taxes or there might be a chance to just change the person it was set up to benefit. The grandparents can fund an account for your daughter.
I would check into having daughter added as beneficiary on your parents account set up for you rather than paying taxes.
I would check into having daughter added as beneficiary on your parents account set up for you rather than paying taxes.
Posted on 6/21/17 at 6:54 pm to fatboydave
Seems like they can set up another beneficiary and transfer the excess funds to that account.
Posted on 6/21/17 at 7:56 pm to RatLTrap
I know that is definitely an option. I was trying to figure out if there was a way to consolidate all if the money in one account with me as the custodian
Posted on 6/21/17 at 10:26 pm to tight lines
Can't be done without penalty. Not worth it. Just have them give you login info if you want to manage it.
Posted on 6/22/17 at 8:00 am to tight lines
You should be able to change beneficiaries easily. As long as the money will still be used for college expenses there shouldn't be a penalty.
Posted on 6/22/17 at 10:40 am to tight lines
The current owner can change the successor owner to you and update the beneficiary to your daughter. When the current owner dies, you become the owner. Forms are on the website. I'm not sure if the owner can transfer ownership of the account while living, but it's worth asking LA START.
Posted on 6/22/17 at 12:02 pm to tight lines
Your parents can change the beneficiary to your daughter, that is a non-taxable event.
However, you can't change account owners or transfer the money in the manner in which you desire, without a taxable distribution, gift, and re-contribution.
If control of the account is that important to you, reimburse your parents for the tax consequences. Otherwise, just have them change the beneficiary to your daughter, and be very happy and thankful that some money will be there for your child.
If you do decide to pay a tax, the tax would be on the account earnings, with a penalty on that as well.
However, you can't change account owners or transfer the money in the manner in which you desire, without a taxable distribution, gift, and re-contribution.
If control of the account is that important to you, reimburse your parents for the tax consequences. Otherwise, just have them change the beneficiary to your daughter, and be very happy and thankful that some money will be there for your child.
If you do decide to pay a tax, the tax would be on the account earnings, with a penalty on that as well.
Posted on 6/22/17 at 7:42 pm to LSUFanHouston
My biggest concern was in the tragic event that my father dies and having to deal with changing the owner at that point. I didn't think about naming me as the successor now, so that solves the problem. Thanks 
Posted on 6/23/17 at 8:01 am to tight lines
Can I open a 529 before my child is born? Or do I have to wait until he/she has a social security number, name lol, etc?
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