Grandparent Owned 529 Accounts Just Got Better скачать в хорошем качестве

Grandparent Owned 529 Accounts Just Got Better

A 529 account owned by a grandparent is often considered one of the most effective ways to save for college for a student. Mainly because 529 accounts owned by the grandparents are invisible to the college financial aid calculation (FAFSA) when determining the financial aid package that will be awarded to a student. But there is a little-known pitfall about distributions from grandparent owned 529 accounts and the rules are changing in 2023. In this article, we will review: • Advantages of Grandparent owned 529 accounts • The FAFSA pitfall of distributions from grandparent owned 529 accounts • The FAFSA two-year lookback period • The change to the 529 rules starting in 2023 • Tax deductions for contributions to 529 accounts • What if your grandchild does not go to college? • Paying K – 12 expenses with a 529 account Contact Michael Ruger with Questions: 518-477-6686 or mruger@greenbushfinancial.com Visit our website: https://www.greenbushfinancial.com/ Subscribe to our channel for more financial planning tips:    / @greenbushfinancialgroup   Frequently Asked Questions (FAQs): Why are grandparent-owned 529 accounts beneficial for college savings? Grandparent-owned 529 accounts are not counted as assets in the FAFSA financial aid calculation, which can help maximize a student’s eligibility for need-based aid. Starting in 2023, distributions from these accounts are also excluded from the student’s income calculation, making them completely invisible to FAFSA. What was the previous FAFSA pitfall with grandparent 529 distributions? Before 2023, when grandparents made distributions from a 529 account to pay for college expenses, those withdrawals were considered “income of the student.” Since student income counts heavily against financial aid, these distributions could significantly reduce need-based aid two years later. What changed with the FAFSA rules in 2023? Under the new FAFSA rules, distributions from grandparent-owned 529 accounts are no longer treated as income to the student. This change eliminates the previous penalty and makes these accounts one of the most favorable tools for college funding. Can grandparents receive tax benefits for 529 contributions? Yes. Many states, including New York, offer state income tax deductions for contributions. In New York, the deduction is up to $5,000 for single filers or $10,000 for joint filers. Rules and deduction limits vary by state, so it’s important to review your state’s specific guidelines. What happens if the grandchild doesn’t attend college? If the grandchild doesn’t use the 529 funds for education, the account owner can change the beneficiary to another family member or withdraw the funds. Contributions can be withdrawn tax- and penalty-free, but earnings are subject to income tax and a 10% penalty if not used for qualified education expenses. Can 529 funds be used for K–12 tuition? Federally, up to $10,000 per year can be used for K–12 tuition expenses. However, not all states recognize K–12 expenses as qualified distributions. For example, New York does not and requires recapture of prior state tax deductions if K–12 withdrawals are made. Are grandparent 529 distributions still reported on the FAFSA? No. Beginning in 2023, both the value of grandparent-owned 529 accounts and any distributions from them are excluded from FAFSA’s financial aid calculation, eliminating the previous two-year lookback issue. #529 #collegesavings #greenbushfinancial