Understanding Grandparent-Owned 529 Plans

What is a grandparent-owned 529 college savings plan? How do they work? What do you need to know about them and what changes should you know about? 

A grandparent-owned 529 plan is a type of 529 college savings plan where the account owner is a grandparent, as opposed to a parent. The grandchild is the beneficiary. 

Another alternative would be a custodial 529 plan account, where the grandchild is both the account owner and beneficiary, but the grandparent serves as custodian. There is no limit on the type of 529 plan where grandparents can make contributions. Grandparents can contribute to grandparent-owned 529 plans, custodial 529 plans, and parent-owned 529 plans. 

Keep in mind that grandparent-owned 529 plans have a different impact on eligibility for need-based financial aid than parent-owned 529 plans. Here's what you need to know if you're interested in a grandparent-owned 520 plan.