In a 529 plan, can an individual be both the donor and the beneficiary?

In a 529 plan, can an individual be both the donor and the beneficiary?

• A. Yes, if the person is of legal age
• B. Yes, if the withdrawals will be used for graduate school
• C. Yes, if the person has retired
• D. Under no circumstances

Answer: (A)

In a 529 plan, it is indeed possible for an individual to be both the donor and the beneficiary, particularly if the person is of legal age. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Typically, the donor is the person who contributes funds to the plan, while the beneficiary is the individual who will utilize the funds for educational expenses. When the donor is of legal age, they have the authority to open a 529 account in their own name and designate themselves as the beneficiary. This flexibility allows individuals to save for their own education or for family members. The key factor is that as long as the individual is of legal age, they can effectively manage their own educational savings. This characteristic of 529 plans supports the broad range of potential account holders and beneficiaries, contributing to the versatility and appeal of these savings vehicles. In contrast, the other options do not reflect the fundamental rules governing 529 plans.

In a 529 plan, it is indeed possible for an individual to be both the donor and the beneficiary, particularly if the person is of legal age. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Typically, the donor is the person who contributes funds to the plan, while the beneficiary is the individual who will utilize the funds for educational expenses.

When the donor is of legal age, they have the authority to open a 529 account in their own name and designate themselves as the beneficiary. This flexibility allows individuals to save for their own education or for family members. The key factor is that as long as the individual is of legal age, they can effectively manage their own educational savings.

This characteristic of 529 plans supports the broad range of potential account holders and beneficiaries, contributing to the versatility and appeal of these savings vehicles. In contrast, the other options do not reflect the fundamental rules governing 529 plans.