529 Plan and College Savings

Archive for October, 2009

Question: Can we move US Savings Bonds from my CHILD’s name into a 529 Plan?

The 529 Plan (NJBest) is in the parent’s name for the benefit of the child, managed by Franklin Templeton Investments.
The child just started college this year, and we didn’t realize the disadvantage of the ownership, for the FAFSA, until recently.

Answer: In order to effectively transfer a savings bond into a 529 Plan, the child can not be listed as a co-owner on the bond. The bond would have to be registered in either or both parents’ name – though it could identify the child as the beneficiary.

Bonds that ARE listed exclusively in the parents’ names are eligible for tax free redemption, if the proceeds are placed into an eligible 529 or Coverdell Education Account.

A great resource for this information can be found here: http://www.treasurydirect.gov/indiv/planning/plan_education.htm at the US government’s TreasuryDirect Education Planning site.

Good luck – I hope this helps.

Cashing in for college