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JUNE 30, 2022

Can my child benefit from more than one 529 account?

Answered by
Richard Polimeni
Head of Education Savings Programs, Bank of America
The short answer is yes — the same child can be the beneficiary of multiple 529 plan accounts. If several people — parents and two sets of grandparents, for instance — want to help fund a child's education, they can either contribute to a single 529 account or set up separate plan accounts.
But looking at the same question another way: If you want to fund a child's education, should you open your own 529 account or contribute to an existing account? The following three factors may affect your decision.
  • The potential tax benefits of owning a 529
  • The investment options each plan offers
  • State maximums for 529 account balances

As the account owner, you control the assets and may get a state tax benefit for contributions to your home state 529 plan

"While several people may contribute to a single account, the person who sets it up is the owner and controls how assets are invested and when distributions are made to cover the beneficiary's education costs," says Richard Polimeni, head of Education Savings Programs at Bank of America. The owner also can change the beneficiary to certain other family members of the current beneficiary at any time.
Your state of residence may also offer a state tax deduction for contributions made to the in-state 529 plan. Depending on state law regarding contributions to a 529 account, non-owner contributors also may be entitled to a deduction.
529 plans also offer attractive estate planning benefits, so grandparents who want the potential state tax benefit of contributions and control of the assets might prefer funding their own 529 for your child.
"Grandparents who want the potential state tax benefit and greater control of the assets might prefer funding their own 529 plan for your child."
— Richard Polimeni, head of Education Savings Programs, Bank of America

Separate 529 plans can be invested differently

Every state chooses program managers for its 529 plans and decides which investment options it will offer. "You can choose a plan from your state or a different one and, although most plans give you widely diversified investments to choose from, having accounts in multiple 529 plans for the same beneficiary could increase the mix of investments or let you select different kinds of assets," Polimeni says.

Having 529 accounts in multiple states may help you invest and contribute more

While 529s have high per-beneficiary account balance maximums — generally ranging from $300,000 to well over $500,000, depending on the state that sponsors the plan — you might want to invest even more among several family members. The maximums apply to the combined balances for the same beneficiary of all accounts in a particular state's 529 plan. So, if you and a grandparent, say, each establish a 529 for your daughter in the same state, contributions are prohibited if the total account balance for both accounts exceeds that state's limit, though many states allow assets to grow beyond the balance limits.
But if one or both of you opens additional accounts for your daughter in another state, contributions there are capped only by that state's maximum. You both might be able to invest $300,000 in each state, for example, providing $600,000 to help fund the child's education.
Help when you want it
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Before you invest in a Section 529 plan, request the plan's official statement from your Financial Solutions Advisor and read it carefully. The official statement contains more complete information, including investment objectives, charges, expenses and risks of investing in the 529 plan, which you should consider carefully before investing. You should also consider whether your home state or your beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds and protection against creditors that are only available for investments in such state's 529 plan. Section 529 plans are not guaranteed by any state or federal agency.

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