Grandparent owned 529

[julygal]

My dad opened 529s for my kids years ago before he passed. My mom recently has been wanting to transfer ownership to me, because her understanding is that it can negatively impact financial aid if she keeps ownership. Plus that is what my sister did when their kid started college. With the research I have done, it looks like that under the previous FAFSA there was some truth to my mom's concern, but my understanding is with the new FAFSA that this is no longer an issue and it might be better to keep my mom as the owner. I am inclined to leave it as is, but she is pushing hard, and I would appreciate some outside input. So what should we do: transfer the account to me or keep it in my mom's name? 

[orval]

From what I understand, if she keeps it, it will not impact any financial aid for your child. She would just pay the school directly. If she transfers it, it is now an asset of yours and will count. This is just what I have been reading, so not certain since it is so damn confusing.

[trissie18]

Jan 30, 2024 13:48:23 GMT -5 orval said:

From what I understand, if she keeps it, it will not impact any financial aid for your child. She would just pay the school directly. If she transfers it, it is now an asset of yours and will count. This is just what I have been reading, so not certain since it is so damn confusing.

This is my understanding as well which is why our 529s are in my mom's name. I also read it is better to take out student loans for the duration of school and then pay them in a lump sum with 529 money once child is done school. Otherwise, any disbursement during schooling has to be claimed as income on the FAFSA form and will reduce financial aid the following year.

[flygirl]

I was also worried about the untaxed income when it was listed u dear a grandparent but it looks like that changed:
www.savingforcollege.com/article/new-fafsa-removes-roadblocks-for-grandparent-529-plans

[orval]

trissie18, I think there is a limit on the amount you can pay for loans with 529 funds.
Found it -- it's $10k lifetime limit.
www.forbes.com/advisor/student-loans/can-i-use-529-to-pay-student-loans/