More Than One Kid? Does Each Want a Distinct 529 Plan

Aug 22, 2022 By Susan Kelly

There are many ways that a 529 college savings plan can help you plan for college. Not only do contributions grow tax-free, but withdrawals are also tax-free if they are used to pay for qualified college costs at eligible colleges and universities. 529 plans are also helpful because they can be transferred from one student to another. This gives a lot of choices to parents. If more than one person wants to help pay for a child's college, like parents and two sets of grandparents, they can either put money into a single 529 account or set up their plans. This raises a fundamental question: If you have more than one child, do you need more than one 529 plan?

About the 529 College Savings Policy

A 529 college savings plan is a way for the state to help people save money for college. It can also pay for elementary through high school private school. This change was made by the Tax Cuts and Jobs Act of 2017. The goal of this law is to get more people to use 529 plans. The most influential people in a 529 plan are those who own the account and who will get the money. Most of the time, the account is owned by the parent, and money is put into the plan. The child who will get money from the plan to pay for high school or college is called the beneficiary. Setting up a 529 savings account is easy, but if you have more than one child who wants to go to college, it can mess up your plans.

How Many 529s Do You Require?

This is an excellent question to ask if you have more than one child. In theory, you could save money for all of your kids' college with just one 529 plan. You should know one significant thing about how these plans work, though. One person can only get money from a 529 plan. You can't name more than one beneficiary, just like you can't do that with an IRA.

So, if you have five children, you could only name one of them as the plan's beneficiary, and you could only take money out of the plan to pay for college costs for that beneficiary, even if your other children were also in school. But there is a bright side: if you own the account, you can always change who the beneficiary is.

Beneficiaries of 529 Plans Changing

By filling out the proper forms, a 529 plan can be changed so that it goes to a different child. Depending on the 529 plan in your state, you may be able to download and fill out these forms online or ask the plan to send you one in the mail. From there, you fill out the forms and send them back with your new beneficiary's name. A 529 plan can be used by everyone in your family.

There are two reasons why you might need to change the beneficiary to a different child. The first is if the person who was supposed to get the money has already finished college and no longer needs the money in the account to pay for school. The second method is if the first individual who is meant to get the funds chooses not to attend college or does not complete their degree. You could add your second-oldest kid to the policy and take money out to pay for that child's college costs, etc.

Advantages of Saving For College With A Single 529 Plan

If you're unsure if you should have one 529 plan for all your kids, it can help to consider the pros and cons. On the plus side, having only one 529 accounts can make it easier to manage your money. You might find it easier to plan out how much money you want to put into the plan each year than to try to put money into different accounts at different times. Also, since there is only one account to use, it may be easier to get money out of the plan.


Some families do better with more than one 529 plan, while others do better with only one plan. When you set up your 529 savings accounts as part of your plan to save for college, think about what you'll do with any extra money if your kids don't use it all. Don't forget that this money is for qualified education costs. If you use it for anything else, you will have to pay a 10% fine and income tax on your money.

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