Based on recent FAFSA revisions, 529 accounts owned by a parent that list someone other than the particular student as the beneficiary, are no longer counted/reported as a parental asset (see https://studentaid.gov/sites/default/fi ... -fafsa.pdf ... search "529" to find the new wording).
This presents an obvious loophole that enables parents to avoid reporting any 529 assets simply by temporarily changing the beneficiary of the account to someone else (a younger sibling still in grade school, for example), and then switching the beneficiary back to the intended child after submitting their final FAFSA.
Here are my questions: Has anyone already taken advantage on this loophole or is planning to do so with their next FAFSA filing? Does taking advantage of this loophole risk getting into some sort of trouble? Or is this loophole a bit like the backdoor Roth IRA in that, while it seems like it shouldn't be allowed, the government has given its approval to do so?
This presents an obvious loophole that enables parents to avoid reporting any 529 assets simply by temporarily changing the beneficiary of the account to someone else (a younger sibling still in grade school, for example), and then switching the beneficiary back to the intended child after submitting their final FAFSA.
Here are my questions: Has anyone already taken advantage on this loophole or is planning to do so with their next FAFSA filing? Does taking advantage of this loophole risk getting into some sort of trouble? Or is this loophole a bit like the backdoor Roth IRA in that, while it seems like it shouldn't be allowed, the government has given its approval to do so?
Statistics: Posted by Milujo — Sat Aug 31, 2024 10:02 am — Replies 2 — Views 196