I have a 529 of which I am both the owner and beneficiary. My adult daughter has outstanding student loans of about $20K. As I understand it, since she has never used any 529 funds to pay the loans, I can change the beneficiary to her and then use up to $10K to pay towards her debt.
Is there any special way that this needs to be done in order to ensure that it is properly documented for tax records?
If I go to the 529 site, it lets me specify that "This is a withdrawal to pay a student loan...". The only option currently presented is to send a check to me as the owner. There will also be an option to send the money to her, once she is the beneficiary (there's also an option to link a bank account for ACH transfers, instead of having a check mailed). But, in any case, is that all there is to it, she'd get a check, deposit it in her regular checking account and then make a payment to the loan in that same amount?
We will probably wait for the SAVE Plan to be officially killed by the new administration before proceeding. She would have had her remaining balance forgiven under that sometime next year. I just wanted to be sure that I understand the process before potentially offering this gift to her.
Is there any special way that this needs to be done in order to ensure that it is properly documented for tax records?
If I go to the 529 site, it lets me specify that "This is a withdrawal to pay a student loan...". The only option currently presented is to send a check to me as the owner. There will also be an option to send the money to her, once she is the beneficiary (there's also an option to link a bank account for ACH transfers, instead of having a check mailed). But, in any case, is that all there is to it, she'd get a check, deposit it in her regular checking account and then make a payment to the loan in that same amount?
We will probably wait for the SAVE Plan to be officially killed by the new administration before proceeding. She would have had her remaining balance forgiven under that sometime next year. I just wanted to be sure that I understand the process before potentially offering this gift to her.
Statistics: Posted by jeffyscott — Mon Dec 02, 2024 8:47 am — Replies 0 — Views 21