Account chet my 2025

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With the recent changes to the FAFSA, 529s held by people other than the custodial parent are now not taken into account when determining aid. Its commonly referred to as the grandparent loophole, but it can be used by anyone really including the non-custodial parent.
The account owner of a 529 plan holds all of the legal power. They can change the beneficiary or liquidate the account (with penalty) at any time. This could be a disadvantage if the owner of your or your childs 529 plan has a change of heart about where to direct their investment.
Choose direct deposit For example, part of your paycheck can be sent to a checking account and a portion can be sent to an investment account, such as a 529 account. You dont miss the money because it deposits before you see it.
If you distribute funds from a 529 plan for non-qualified expenses, youll pay a 10% withdrawal penalty on the earnings portion of the withdrawal, and it will be taxed as income to the beneficiary. Some additional issues may arise, such as state-specific tax penalties or state income tax deduction recapture.
On the 2025-2026 FAFSA, students are not required to report cash gifts from a grandparent or contributions from a grandparent-owned 529 savings plan. Because of this, grandparents can now use a 529 plan to fund a grandchilds education without impacting that grandchilds financial aid eligibility.
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CHET is a tax-advantaged, low cost savings program specifically designed to help families save for future college costs. The funds can be used at accredited colleges and universities across the country, including vocational and technical schools, and some colleges abroad.
From a financial aid perspective, its better for the 529 to be in the grandparents name. If it is in the parents name, it will mean 5.64% is eaten into the ``need calculation meaning less potential aid. The benificiary can be changed to anyone at any time. No relation whatsoever is required.

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