Can You Have Multiple 529 Plans for the Same Child?

A 529 plan is a tax-advantaged savings vehicle for qualified education expenses. Investments grow tax-deferred, and withdrawals are tax-free when used for eligible costs such as tuition, fees, books, and room and board at accredited institutions. They also cover certain K-12 tuition expenses up to $10,000 per year, including additional K-12 expenses like books and tutoring. A common question for families is whether a single child can be the beneficiary of multiple 529 plans.

Opening Multiple 529 Plans for One Child

A child can be the beneficiary of multiple 529 plans without federal restrictions on the number of accounts. This flexibility allows for various scenarios in setting up educational savings. For instance, the same individual might open multiple 529 plans for one child, perhaps across different states to take advantage of specific investment options or state tax benefits. Some plans may also allow an account owner to hold different investment portfolios within the same state’s program for the same beneficiary.

Another common situation involves different individuals opening separate 529 plans for the same child. Parents, grandparents, other relatives, or even friends can each establish a distinct 529 account with the same child named as the beneficiary. Each of these plans typically has its own designated account owner, who maintains control over the funds. Establishing multiple accounts can offer advantages such as investment diversification or keeping contributions from different sources separate.

Contribution and Ownership Considerations

While there are no federal limits on the number of 529 plans a beneficiary can have, each state-sponsored plan imposes lifetime contribution limits per beneficiary. These limits vary significantly by state, generally ranging from approximately $235,000 to over $597,000. They apply to the total amount contributed across all plans for that specific beneficiary, regardless of who owns them or in which state they are established. Contributions to 529 plans are considered gifts for federal tax purposes.

For 2025, an individual can contribute up to $19,000 per beneficiary annually without triggering federal gift tax implications or using their lifetime gift tax exclusion. Married couples can contribute up to $38,000 per beneficiary by gift-splitting. Larger contributions are possible through a “superfunding” provision, allowing a lump sum contribution of up to five times the annual gift tax exclusion ($95,000 for individuals, $190,000 for married couples in 2025) to be spread over a five-year period for tax purposes. If this election is made, a gift tax return must be filed. Different account owners, such as parents versus grandparents, retain control over their respective plans, which impacts decisions regarding investments and distributions.

Impact on Financial Aid Eligibility

The ownership of a 529 plan significantly influences its assessment for federal student financial aid purposes, as determined by the Free Application for Federal Student Aid (FAFSA). A parent-owned 529 plan is reported as a parental asset on the FAFSA. These assets have a relatively low impact on financial aid eligibility, reducing aid by a maximum of 5.64% of the asset’s value. This means that a substantial portion of the saved funds remains protected from aid calculations.

Grandparent-owned or other non-parent-owned 529 plans are generally not reported as assets on the FAFSA. This changed with the simplified FAFSA, effective for the 2024-2025 academic year, which no longer requires reporting cash support from non-parents. Under the updated FAFSA rules, distributions from grandparent-owned 529 accounts no longer need to be reported as untaxed income for the student, thus removing their impact on need-based financial aid.

Managing Multiple Plans

Effectively managing multiple 529 plans for a single beneficiary requires careful consideration of distribution strategies and administrative processes. When making qualified withdrawals, such as for tuition or other eligible expenses, the account owner can choose which plan to draw from. This decision might be influenced by factors like investment performance across different plans, specific state tax benefits offered by the plan’s state of origin, or varying program rules.

Changing the beneficiary of a 529 plan is permissible, particularly if a beneficiary does not use all the funds or if circumstances change. The new beneficiary must be an eligible family member of the original beneficiary. This option allows for flexibility in reallocating funds among siblings or other family members for educational purposes. For simplified management, multiple 529 plans can be rolled over or consolidated into a single plan. The IRS generally allows one penalty-free rollover per beneficiary every 12 months. Additionally, under the SECURE 2.0 Act, a limited amount of 529 funds (up to $35,000 lifetime) can be rolled over to a beneficiary’s Roth IRA, provided certain conditions are met.