529 changing beneficary to my partner

[jad56061]

Can change the 529 beneficiary to my partner and payoff his debt? How much per year can I pay off? Is it $10,000 total or $10,000 per year?

[K M W · Accepted solution]

Amounts distributed from a 529 plan are not taxable if rolled over to another 529 plan for the benefit of the same beneficiary or for the benefit of a member of the beneficiary's family (including the beneficiary's spouse).

IRS Publication 970 defines members of the beneficiary's family as the beneficiary's spouse or the following relatives of the beneficiary:

1. Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them.
2. Brother, sister, stepbrother, or stepsister.
3. Father or mother or ancestor of either.
4. Stepfather or stepmother.
5. Son or daughter of a brother or sister.
6. Brother or sister of father or mother.

7. Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
8. The spouse of any individual listed above.
9. First cousin.

So, unfortunately, if the person you wish to make the beneficiary is not on the above list, you cannot transfer the funds tax free to a 529 plan with them listed as the beneficiary.

[jad56061]

Perfect thank you!