529 Planning Qualified Tuition Programs 10 Years Later

The Basics • Prepaid Tuition Plans • College Savings Plans

The Basics • It’s a Gift (to beneficiary) • It’s not in Estate (of

That 5 Year Thing • Elected on a gift tax return • What about

Switching Beneficiary? • Family member of beneficiary • Extensive listing of “family member” •

Investment Changes Plan Changes • Once per year • Unless beneficiary change

Plan Distributions • “Qualified Higher Education Expenses”: Tuition, Fees, Books, Supplies and Equipment Required

Plan Distributions • Used for education. How soon? Is this a calendar year rule?

IRS Matching Program Problems • Form 1099 Q –Distributions • Form 1098 T –

Losing Money • Commentary in IRS publication • Miscellaneous deduction

Owners Own • Account available to creditors of owner • Account treated as asset

Special Owners • UGMA/UTMA account “owners” and restrictions on beneficiary change. • Trusts as

State Distinctions • State Deductions for Contributions • Maximum Contributions • Investment Options •

State Distinctions • Some states have multiple plans – Nevada has 5 different arrangements

Rated Best by Morningstar • University of Alaska (T Rowe Price) • Maryland College

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529 Planning Qualified Tuition Programs 10+ Years Later Estate Planning Council Hampden County February 12, 2013

The Basics • Prepaid Tuition Plans • College Savings Plans

The Basics • It’s a Gift (to beneficiary) • It’s not in Estate (of owner) • Owners own. Beneficiaries are fungible • Investment change restrictions • Plan change restrictions • NO tax on qualified distributions

That 5 Year Thing • Elected on a gift tax return • What about late filing? • Concurrent elections to “top off” ?

Switching Beneficiary? • Family member of beneficiary • Extensive listing of “family member” • No limit to frequency • Make other changes at same time

Investment Changes Plan Changes • Once per year • Unless beneficiary change

Plan Distributions • “Qualified Higher Education Expenses”: Tuition, Fees, Books, Supplies and Equipment Required for Enrollment, Room and Board.

Plan Distributions • Used for education. How soon? Is this a calendar year rule? Is this a reasonable time rule?

IRS Matching Program Problems • Form 1099 Q –Distributions • Form 1098 T – Tuition Payments • No place on return to show distributions used to pay expenses. • Tuition deduction/credits limited by income • Inconsistent preparation of 1098 T by education institutions

Losing Money • Commentary in IRS publication • Miscellaneous deduction

Owners Own • Account available to creditors of owner • Account treated as asset of parent for financial aid— regardless of owner

Special Owners • UGMA/UTMA account “owners” and restrictions on beneficiary change. • Trusts as account owners.

State Distinctions • State Deductions for Contributions • Maximum Contributions • Investment Options • Fees/Penalties • Time/Age Limitations

State Distinctions • Some states have multiple plans – Nevada has 5 different arrangements

Rated Best by Morningstar • University of Alaska (T Rowe Price) • Maryland College Investment Plan (T Rowe Price) • Nevada’s Vanguard 529 Plan (Vanguard Plan) • Utah Education Savings Plan (Vanguard Plan)

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