Can I transfer 529A ownership back to grandparent to fix FAFSA reporting error?

You're right that the 2024-2025 FAFSA simplification removed the requirement to report grandparent-owned 529 plans. However, there are a few things to consider before making changes: 1. Yes, you can transfer the 529A back to your mother if your state allows ownership transfers 2. You can submit a FAFSA correction after the transfer is complete 3. The correction would remove that asset from your parental asset calculation, potentially increasing aid eligibility But be aware that some states have waiting periods or restrictions on 529 ownership transfers, and sometimes there are tax implications. I'd recommend contacting your 529 plan administrator first to understand any potential issues with transferring it back.

I went through something similar last yr with my daughters college fund!! The financial aid office told me that parent assets are assessed at a rate of up to 5.64% when calculating your SAI (Student Aid Index, formerly EFC). So that $63k in ur 529A is probly reducing ur aid eligibility by around $3,500 max. Might be worth fixing if ur kids are close to getting more grant $$$. Just be careful about timing!!

wait i thought 529s dont count on fafsa anymore for anybody? thats what my financial advisor told me last month when we were doing college planning. this whole system is so confusing!!

I've worked with many families on this exact issue. You have until the end of the FAFSA processing cycle to make corrections, which is typically September 10, 2025 for the 2024-2025 FAFSA. But more importantly, I'd recommend you crunch the numbers first before making any changes. Here's why: If your income is already relatively high, removing the 529A from your assets might not meaningfully change your SAI score enough to justify the hassle of transferring ownership. The FAFSA formula gives an asset protection allowance that shields some of your assets anyway. Also, if your 529A is in a state with restrictions on ownership transfers, you might face penalties or waiting periods that complicate things further.

lol the fafsa is such a joke! I spent HOURS figuring out all these asset rules and still got barely any aid for my kid. They just want us to jump through hoops. Good luck with your paperwork nightmare!

Have you tried calling the Federal Student Aid Information Center to ask about the correction process? I was in a similar situation (different issue but needed to make corrections) and finally got through using Claimyr.com to skip the hold times. They have a video demo at https://youtu.be/TbC8dZQWYNQ that shows how it works. Talking to an actual FSA representative was way more helpful than trying to figure out all the rules myself. They walked me through exactly what corrections I could make and the deadlines.

One more thing to consider: If you're planning to transfer the 529A back to your mother, make sure you understand how your state treats the transfer. Some states consider it a non-qualified distribution (which could trigger taxes and penalties) followed by a new contribution. Others allow direct transfers of ownership. Ohio's CollegeAdvantage plan does allow account ownership changes, but you'll need to submit specific paperwork.

can someone explain the difference between 529 and 529A? i thought they were the same thing???

This is the exact reason I told my parents to keep their 529 for my kids in THEIR names!! The financial aid system is crazy but at least we can use these little strategies to maximize aid. Def look into that transfer ASAP and submit the correction. Every bit of aid helps!!!

Just wanted to add a heads up about timing - if you do decide to transfer the 529 back to your grandmother and submit a FAFSA correction, make sure to keep detailed records of everything. I went through a similar process last year and the financial aid office at my daughter's college wanted documentation showing the transfer was legitimate and not just done to manipulate aid eligibility. Having the paper trail showing your mom was the original owner really helped my case. Also, some colleges have their own deadlines for processing aid changes that might be earlier than the federal FAFSA deadline, so definitely check with each school your kids are applying to!

I'm dealing with a similar situation but from the other side - I'm a grandparent who kept my 529 in my own name specifically because I knew about the FAFSA reporting changes. One thing to watch out for is that even though grandparent-owned 529s don't need to be reported as assets anymore, if your mom takes distributions from the account to pay for college expenses, those distributions might still be considered untaxed income to your kids in future FAFSA years. The rules around this are still being clarified, so you might want to factor that into your decision. Also, make sure your mom is comfortable being the account owner again - she'll be responsible for managing the investments and making distribution decisions. Sometimes the peace of mind of keeping control is worth more than the potential aid benefit!

I'm new to all this FAFSA stuff and this thread has been really eye-opening! I had no idea about the differences between parent-owned vs grandparent-owned 529 plans. My parents have been talking about starting college savings for my 3-year-old, and now I'm wondering if we should have them open the account in their name instead of mine. Can someone clarify - if grandparents open a 529 for their grandchild, does that completely eliminate any FAFSA reporting requirements? And are there any downsides to having grandparents as the account owners that I should be aware of? This seems like something every family should know about when planning for college costs!

This thread has been incredibly helpful! I'm in a similar boat with grandparent vs parent-owned 529 confusion. One thing I wanted to add that might help others - I just went through the FAFSA correction process for a different issue last month, and it was actually much smoother than I expected. You can log back into your FSA ID and make changes directly online for most corrections. The key is making sure you have all your documentation ready before you start. Also, don't forget that if you do transfer the 529 back to your mom, you'll want to make sure she understands she'll need to report any distributions on her tax return going forward (though this usually doesn't create any tax liability if used for qualified education expenses). The peace of mind from potentially getting more aid might be worth the paperwork hassle, especially with $63k involved!

As someone who works in college financial aid, I wanted to add a few practical tips for anyone considering this type of 529 ownership transfer. First, definitely contact your 529 plan provider before making any moves - each state's plan has different rules and some require specific forms or have waiting periods. Second, when you do make the FAFSA correction, be prepared to provide documentation showing the legitimate reason for the transfer (like proof your mom was the original owner). Third, consider the timing carefully - if your kid is already a senior and this is their last year of aid, the benefit might be minimal compared to the hassle. But for families with younger students or multiple kids like the OP, it could definitely be worth it. The key is being transparent with financial aid offices about why you're making the change - they deal with these situations more often than you'd think and are usually helpful if you're upfront about it!