Simple Cost Sharing Agreement With 529 In Massachusetts
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Thanks to a recent legislative update and the new “529 grandparent loophole,” grandparents who own a 529 account can make significant contributions to their grandchild's education savings without necessarily affecting the grandchild's eligibility for federal student aid.
This year, a big change happened to 529 college savings plans. As of 2024, families can roll over unused 529 funds to the account beneficiary's Roth individual retirement account, without triggering income taxes or penalties, as long as the 529 plan has been open for at least 15 years.
If an investor opened a tax-deferred 529 account with an initial investment of $2,500 and contributed $100 every month for 18 years, the account could be worth over $6,300 more than with similar contributions into a taxable account.
Opening a 529 can be completed in (as little as) these four steps: Select a plan. You'll have to choose between a savings plan or a prepaid plan. Choose a beneficiary. This will likely be your child — but remember, you can change the beneficiary at any time without penalty. Open the account. Build your portfolio.
So, in general, from a FAFSA standpoint, it is now a lot better to have grandparents own a 529 plan, compared to parents owning the 529 plan. However, if the school utilizes the College Scholarship Service (CSS) Profile, then all bets are off, as the college will determine need-based financial aid as it sees fit.
Opening a 529 can be completed in (as little as) these four steps: Select a plan. You'll have to choose between a savings plan or a prepaid plan. Choose a beneficiary. This will likely be your child — but remember, you can change the beneficiary at any time without penalty. Open the account. Build your portfolio.
The account owner always maintains control of the 529 plan account, even after the beneficiary reaches college age or becomes an adult. The account owner can withdraw funds or change the designated beneficiary at any time. The account owner can also choose to use only a portion of the funds for the beneficiary.
