How to Use a 529 for Someone Other Than Your Kid

Learn how to redirect 529 funds to other family members or even yourself for education expenses without penalties.

  1. Check who counts as an eligible beneficiary. The IRS allows you to transfer 529 funds to siblings, parents, grandparents, aunts, uncles, nieces, nephews, cousins, and spouses of any of these people. You can also name yourself as the beneficiary. The key restriction: the new beneficiary must be in the same generation or older than the original beneficiary to avoid gift tax complications.
  2. Contact your 529 plan administrator. Call the customer service number for your specific 529 plan or log into your online account. Most plans have a beneficiary change form that requires the new beneficiary's Social Security number and basic personal information. Some plans process changes immediately while others take 2-3 weeks.
  3. Consider the timing of your change. You can only change beneficiaries once every 12 months per account. Plan this carefully if you're juggling college expenses for multiple family members. Some families keep the original beneficiary until they're done with school, then switch to the next person in line.
  4. Understand what expenses still qualify. The same rules apply regardless of beneficiary: tuition, fees, books, supplies, and room and board for enrolled students. You can use 529 money for trade schools, community colleges, four-year universities, and graduate programs. K-12 tuition is limited to $10,000 per year per beneficiary.
  5. Watch out for state tax implications. If you claimed state tax deductions for 529 contributions, changing beneficiaries might trigger recapture taxes in some states. Check your state's specific rules or ask a tax professional. Federal taxes aren't affected as long as you're changing to an eligible family member.
  6. Keep records of the beneficiary change. Save confirmation of the change and any related paperwork. You'll need this for tax filing if you use the funds within the same calendar year as the change. The new beneficiary's information will appear on the 1099-Q form you receive when money is withdrawn.