Permalink Submitted by Alan - IRA critic on Tue, 2022-05-03 21:58
It is reportable as a distribution to the beneficiary, but there is no reason that the beneficiary could not gift the returned contribution back to the donor. The donor might want to make a contribution to another type of account.
Permalink Submitted by Mary K. Dean on Tue, 2022-05-03 22:19
Thanks again. Can it be placed the the contributor’s Schwab A/C rather than the beneficiaries? That would be simpler since the beneficiaries do not have brokerage or bank a/cs>
Permalink Submitted by Mary K. Dean on Tue, 2022-05-03 22:35
If the distribution has to be in the Child’s name, can the contributor create a UTMA account then transfer that to the 529? It would be quick for us to establish a UTMA since the contributor (trustee) could sign the account form. She has about 6 grandchildren.
Permalink Submitted by William Tuttle on Wed, 2022-05-04 15:18
The link does not make clear that a UTMA account can only be transfered to a 529 UTMA account (yes they do exist).
It must be for the exclusive use of the beneficiary. The beneficiary can not be changed by the custodian and the custodian cannot take non-qualified distributions.
The custodian may only make qualified distributions for the benefit of the beneficiary and non-qualified distributions directly to the beneficiary.
A change of beneficiary can only occur after the custodian relinquishs and the beneficiary assumes control after the age of termination. As this will then solely be their 529 account to do with as they wish.
Permalink Submitted by Alan - IRA critic on Tue, 2022-05-03 04:22
No, it must be removed, and then a new contribution made to the 529.
Permalink Submitted by Mary K. Dean on Tue, 2022-05-03 19:38
When removed does it go into the donor’s account?
Permalink Submitted by Alan - IRA critic on Tue, 2022-05-03 21:58
It is reportable as a distribution to the beneficiary, but there is no reason that the beneficiary could not gift the returned contribution back to the donor. The donor might want to make a contribution to another type of account.
Permalink Submitted by Mary K. Dean on Tue, 2022-05-03 22:19
Thanks again. Can it be placed the the contributor’s Schwab A/C rather than the beneficiaries? That would be simpler since the beneficiaries do not have brokerage or bank a/cs>
Permalink Submitted by Mary K. Dean on Tue, 2022-05-03 22:35
If the distribution has to be in the Child’s name, can the contributor create a UTMA account then transfer that to the 529? It would be quick for us to establish a UTMA since the contributor (trustee) could sign the account form. She has about 6 grandchildren.
Permalink Submitted by Alan - IRA critic on Wed, 2022-05-04 01:09
Yes, the following link explains this transaction:
UTMA Transfer to a 529 Account – Fairmark.com
Permalink Submitted by William Tuttle on Wed, 2022-05-04 15:18
The link does not make clear that a UTMA account can only be transfered to a 529 UTMA account (yes they do exist).
It must be for the exclusive use of the beneficiary. The beneficiary can not be changed by the custodian and the custodian cannot take non-qualified distributions.
The custodian may only make qualified distributions for the benefit of the beneficiary and non-qualified distributions directly to the beneficiary.
A change of beneficiary can only occur after the custodian relinquishs and the beneficiary assumes control after the age of termination. As this will then solely be their 529 account to do with as they wish.