How does a 529 plan affect the CSS profile?
A. When completing the FAFSA and CSS Profile for a dependent student, 529 college savings and prepaid tuition accounts are reported as a parental asset, unless the account is owned by someone other than the parent (e.g. grandparent, aunt, uncle, etc.).
Does the CSS Profile ask for 529 plan?
Unlike the FAFSA, which excludes 529 plans whose account owner is a grandparent or third-party, the CSS profile asks for all 529 plans where the student is listed as a beneficiary.
Do I need to report 529 distributions?
When 529 plan funds are used to pay for qualified education expenses there is usually nothing to report on your federal income tax return.
Who qualifies for CSS Profile?
Undergraduate students whose parents live in the U.S. may be eligible for a CSS Profile fee waiver. Fee waivers are provided to students who qualified for an SAT fee waiver; or family adjusted gross income is up to $100,000; or to students who are an orphan or ward of the court and under the age of 24.
Does the parent fill out the CSS Profile?
To complete a CSS Profile application, you need a College Board student account. If you need to complete the CSS Profile as a parent (for example, as a noncustodial parent), you still need to create and use a student account. You just need to create a student account using the parent’s information.
Are distributions from a 529 plan taxable?
529 withdrawals are tax-free to the extent your child (or other account beneficiary) incurs qualified education expenses (QHEE) during the year. If you withdraw more than the QHEE, the excess is a non-qualified distribution. The principal portion of your 529 withdrawal is not subject to tax or penalty.
What documentation is needed for 529 withdrawal?
Form 1099-Q
In each year you take withdrawals from a 529, the plan administrator should issue a Form 1099-Q, which reports the total distribution taken from the account in a given year, the portion of the distribution that came from earnings in the account, and the portion of the distribution that represents the original …
Do 529 plan distributions affect financial aid?
This income will be assessed at 50% when calculating EFC. Earnings in a 529 plan, however, do not have to be reported on the FAFSA and will have zero affect on financial aid. 529 plan distributions are another area where the impact on financial aid will depend on the account owner.
Does a grandparent-owned 529 plan count as an asset?
A grandparent-owned 529 plan is not counted as an asset on the Free Application for Federal Student Aid (FAFSA), but they are considered by nearly 200 schools who use the CSS Profile. A bigger concern arises when a grandparent takes a 529 plan distribution to pay for college.
Is a 529 plan considered a parental asset on the FAFSA?
The value of a 529 plan owned by a dependent student or one of their parents (529 plans do not allow joint ownership) is considered a parental asset on the FAFSA.
What are the risks of contributing to a parent 529 plan?
Risks of contributing to a parent-owned 529 plan A 529 plan beneficiary has no legal rights to a 529 plan account. Instead of using the funds to pay for the beneficiary’s college expenses, a parent may decide to spend the funds on a big screen TV, a new Porsche or a European vacation.