529 Plan and College Savings

Archive for January, 2007

Question: Can a grandparent deduct contributions to a 529 Plan for state taxes.?

I set up a 529 college savings plan for each of my two daughters. I decided on the South Carolina Future Scholar Direct Sold plan due to low fees and state tax deduction for contributions. My question is this: If my parents (children’s grandparents) contribute to the plan that I set up, can they deduct thier contributions from state taxes?
Clarification: Grandparents are residents of SC. They are not the 529 account owner (I am). Can they deduct their contributions to the 529 Plan if they are not the account owner?

Answer: There is no restriction that the contributor to the South Carolina 529 Plan be the account owner. Your grandparents can deduct 100% of their contributions on their SC state tax return.

If they give the money to you and then you make the contribution, you can deduct it.

Debby Hohler