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Question for the Money Doctors

Question submitted on Apr 6, 2017.

Question

Is there tax consequences when changing owners on a 529 plan? In a divorce the ownership is changing on a family 529 plan, the beneficiary is keeping the same. the husband is currently the owner, they wish to change to wife as owner and keep the son the same as beneficiary.

Answer

Most 529 plans do allow for a transfer of ownership without restriction or tax implication, however it is dictated by the state where the plan is in place.  Divorce oftentimes is one of the special circumstances for states that are more restrictive.  It is wise to check with your plan administrator for more details regarding the particular plan specifications in addition to the particular state tax guidance.  Be sure to name a successor to take over the ownership rights of the plan in case of the owner’s death in any event. 


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