#43327 - 05/12/08 06:27 PM
best way to take 529 distributions from grandparents account
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raven
Registered: 05/12/08
Posts: 2
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Hi - I'm not sure what is the best (and legal) way to take distributions from my child's 529 account for qualified educational ppurposes. It is owned by his grandfather and he is listed as the benificiary.
For example:
1. Do we need to request a distribution individually for every payment we need to make?
2. Can I pay for everything myself and then have the distribution made out to me (or maybe pay for everything and have the distribution made out to my son who would pay me)?
I am looking for the easiest way to handle the distributions, and hopefully not have to bother his grandfather very much.
Sorry if I seem to be making this complicated!
thx
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#43331 - 05/12/08 11:42 PM
Re: best way to take 529 distributions from grandparents account
[Re: raven]
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itstoomuch
Registered: 01/01/06
Posts: 716
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Try not to take a reimbursement from the 529, the bookkeeping gets complicated. What is meant by this is that you pay the expenses, the 529 pays you.
A better way: Have the 529 pay the school directly. This can be done by a variety of methods: On request by GP to 529 to pay school; By periodic payment by 529 to school; By preauthorized, 529 monthly payment to a third party (tuition paid in 10 monthly installments, small service charge which is included) who then pays the school.
The request for distribution from the 529 people is pretty simple. Examine the form. The hardest part is to determine how you want the money sent: regular mail, overnite mail, priority mail, wire/electronic.
Edited by itstoomuch (05/12/08 11:45 PM)
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#43333 - 05/13/08 07:17 AM
Re: best way to take 529 distributions from grandparents account
[Re: itstoomuch]
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Joe Hurley
Registered: 01/07/00
Posts: 2056
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Most 529s give you three options: disburse to beneficiary, account owner, or institution. Since you are not any of those, you most likely cannot have the distribution to you. I prefer the reimbursement approach (your child would reimburse you for the 529 funds he receives) so that the school never sees the 529 check and doesn't have the opportunity to mess with the financial aid package. You simply need to make sure the 529 money comes out in the same calendar year as your payment of the school expenses.
Joe
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#43368 - 05/19/08 02:07 PM
Re: best way to take 529 distributions from grandparents account
[Re: Joe Hurley]
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raven
Registered: 05/12/08
Posts: 2
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Thanks for your thoughts! I like the idea of shielding the 529 from the school, although it seems a bit more difficult.
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#43370 - 05/19/08 11:04 PM
Re: best way to take 529 distributions from grandparents account
[Re: raven]
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itstoomuch
Registered: 01/01/06
Posts: 716
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The third party acts as a escrow company. Even Harvard uses TuitionPay. You will probably get an information pack on the program from your school after July.
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Moderator: Joe Hurley
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