There are many parents and grandparents that love using ‘529’ accounts to help their children and grandchildren pay for a college education. According to the College Savings Plan Network these state-sponsored savings plans currently hold a record amount of assets with over $258.2 billion in over 12.3 million open accounts. People should try to fund these college savings accounts as much as they can. It is also a good idea to make contributions and withdrawals online, and they should consider using the automatic-contribution feature. A grandparent-owned account does not count towards the families expected contribution on FAFSA applications so families should wait until the last FAFSA application has been filed before taking distributions from an account owned by a grandparent. There are certain situations where estate or gift taxes are concerned when a ‘529’ account might not be the best option, so families should seek professional advice about the best options.
See Chana R. Schoenberger, How to Be Smarter With A ‘529’ Account, The Wall Street Journal, November 8, 2015.
