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BrightStart 529– Who should “own” the account?

By Terry Savage on December 06, 2018 | College Savings / Student Loans

I would like to open an account for my infant grandson in the amount of $500. Is it better to open the account and for me to be the owner, or should I give the money to my daughter and have her be the owner? Thank you for your response.

Terry Says

I’m glad you’re opening the account.  I tend to think the parent should be the owner, unless you’re concerned that they will try to use the money before college (which would result in penalties and taxes).   If the account is opened in the parent’s name, it weighs less heavily in the financial aid formula eventually.

(A grandparent-owned account does not have to be disclosed in the financial aid FAFSA forms.  But when the money is withdrawn to pay for college it is considered a “student asset” and will weigh 7x more heavily against them in the aid formula for the following year.  That’s why I suggest grandparent-owned 529 account only be used for the last year of college — when they won’t be applying for aid in the next year!)

Either way, you can make regular contributions on holidays and birthdays — a gift that truly grows for the future!

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