529 Day: A gift for grandchildren, with benefits for grandparents

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Lower your taxes. Leave a legacy. A win-win for grandparents.

One of your most personal financial goals as a grandparent may be to leave a legacy that helps ensure the success of future generations. With the cost of college rising every year, more and more grandparents have started contributing to their grandchildren’s education savings.

And we have good news: opening or contributing to a 529 plan offers benefits to you as the gift-giver too.

Enjoy tax-free investment growth — and other legacy planning benefits

Special provisions specific to 529 plans allow you to contribute without incurring federal gift taxes or reducing your unified federal estate and gift tax credit, while also reducing your taxable estate.

As an account owner, you have complete control over the assets and the flexibility to change beneficiaries at any time. You can also take non-qualified distributions, if needed. Earnings are subject to a 10% federal penalty.

And there are two big advantages exclusive to grandparent-owned accounts:

1. No probate worries for you. Naming a successor owner easily transfers assets to the next generation outside of the probate process — saving your family stress and worry.

2. No impact on aid for them. Assets in a grandparent-owned account are not considered part of the student’s financial aid formula. In other words, the amount doesn’t count against them. But keep in mind: qualified distributions are considered student income and can impact the student’s eligibility for subsequent needs-based financial aid.*



Talk with your financial advisor about tax-advantaged education and legacy planning with a 529 plan today.

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