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Who controls the 529 account? The answer is simple: the account owner. There are two distinct parties involved in a 529 plan — the account owner and the beneficiary.
The account owner is the person who opens the 529. As the account owner, this person manages the college saving plan: selecting or changing the beneficiary, selecting the investment options, making withdrawals, terminating the account, and receiving withdrawals if no other person is designated. The account owner also makes contributions to the account, but others can help, too. Anyone can contribute to an already established 529, but only the account owner controls and sees the assets within it.
The account owner, typically a parent, opens the account for the designated beneficiary, typically their child. However, grandparents, other relatives, and friends are all potential CollegeAdvantage 529 plan account owners. The account owner does not have to be related to the beneficiary. The owner designates the beneficiary, sets investment allocations, and, ultimately, controls withdrawals from the account.
If the account owner is not the beneficiary’s parent, the owner can also change account ownership at a later date, if needed, to a parent or another owner. When the account is opened, the account owner should also a select a successor owner, someone who can assume management of the account in the event of the account owner’s death or incapacity.
The beneficiary is the person whose future qualified higher education expenses may be paid from the account. While the beneficiary enjoys the advantages of having a 529 college savings plan, they have no managerial authority over it. There is one exception to this – when the account owner is also the beneficiary of the fund – in the case of an adult returning to pursue an advanced degree, an alternative degree, or continuing education.
Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts work differently. For additional information about UGMA/UTMA accounts, please read page 7 of the CollegeAdvantage Direct Plan Offering Statement.
With 529 plans, it is the account owner who controls the savings for their chosen beneficiary. Are you ready to become a CollegeAdvantage 529 plan account owner for one of your loved ones? Visit here to sign up today.
Posted on April 28, 2016