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Ask Jean: Name on the 529 Account

iStock_000005040646XSmallHi Jean – I know you have many questions to answer. Sorry to repeat my question again but I’m really desperate for an answer. Should I change the name on my three kid’s 529 College Accounts to my mother’s name so that $4,000 a piece is not considered with the financial aid or scholarships they may receive? We wanted that money to be for books and spending money spread out over time. We will not have extra money to send them when they are in college. This was a little cushion we thought would help. They are 16, 13, and 9. And…if we change the name to my mom rather than us (the parents) are we going to be penalized? Thanks Jean!

Don’t worry, you’re fine. A 529 is always considered a parental asset as long as your child is still a dependent on your tax returns. If your child becomes independent, only then is it treated as the asset of the child. And unfortunately, though $4000 is a very nice sum of money, it isn’t going to make a big difference where financial aid is concerned. College tuitions are just too high.

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