All 529 plans accept third-party contributions, regardless of who owns the account. That means anyone, including grandparents, aunts, uncles or even friends can help a child save for college. You do not have to be a family member of the beneficiary to contribute to their 529 plan.

How do I start a 529 plan for someone else?

6 Steps for Giving a 529 Account this Christmas

1. Talk to the Parents. You can open a college 529 account for pretty much anyone, as long as you have their Social Security number.
2. Send a College Tuition Gift Card.
3. Write a Check.
4. Research your Options.
5. Choose and Open a 529 Account.
6. Give the Gift Creatively.

Can a 529 plan be used for something else?

A 529 account can be used for other types of education besides college, including trade and vocational schools and more. However, if you decide to use the money for something other than qualified education expenses, you will have to pay income taxes plus a 10% penalty on the earnings.

Should parents or grandparents open 529?

Because of the way financial aid is determined, it’s generally best if the beneficiary’s parents own the account. But there’s an exception. If you open a 529 account as a grandparent and your grandchild only uses the assets for the last 2 years of college, the 529 assets probably won’t impact student aid at all.

Can an aunt open a bank account for a child?

A custodial savings account is a savings account that you open in a child’s name. Anyone, including friends, Aunties, and other relatives, can contribute to the account, but the underage child can only withdraw money with the permission of the person who opened the account.

Can I roll a 529 plan into an IRA?

529 education savings plan accounts can be transferred from one beneficiary to another eligible member of the family or rolled over into other 529 accounts for the same beneficiary or an eligible family member. Rollovers from a 529 plan to retirement plans (such as an IRA) are not allowed.

Can grandparents start a 529 plan?

Yes, you most certainly can open a 529 account as a grandparent — you generally can name anyone as a beneficiary of a 529 account.

Can a 529 plan be set up for a friend’s child?

With a 529 plan, an account could be set up for your friend’s child, and contributions to the account could be made by you and others who wish to help fund it. The 529 account would grow tax-deferred and be distributed tax-free for the beneficiary’s qualified college costs, thereby avoiding income taxes.

Where does the money go in a 529 plan?

Money in 529 accounts can be transferred to Achieving A Better Life Experience (ABLE) accounts, which are tax-advantaged accounts for individuals with disabilities. Money in ABLE accounts goes toward living and education expenses.

Can a 529 account be opened through a broker?

You can open a brokerage account through a broker (although some say brokerage fees aren’t worth it), and they’ll know where best to invest your money. The downside is that there are no tax advantages with a brokerage account, like there are with 529 plans.

Can a 529 plan be transferred to a different person?

If the beneficiary is in a different generation than an eligible family member and you would like to transfer the account, the money in the 529 plan may be subject to a generation-skipping tax. For example, if a grandfather changes the beneficiary of a 529 account from himself to his grandson, the account would be subject to an additional tax.