I don’t have kids of my own, but I do have 1 young niece. I would like to start a 529 account for her and surprise her (and parents) with it on her 18th birthday. Since I want it to be a surprise to both her and her parents I wouldn’t have her SSN in order to set her as the beneficiary.
Could I just start a 529 in my name then down the road when I hand it over just change the beneficiary to her?
Is there a different/better way to do it?
Anything else I need to keep in mind if doing it this way?
My understanding is that you can do what you propose. However, there may be some tax implications (paperwork) as changing the beneficiary at a later date appears to make the full amount a gift.
These are some possible considerations depending on your sibling and your financial situations.
A sibling with limited resources might contribute to their daughter’s 529 at the expense of retirement contributions. In that situation, knowing about your 529 might be of benefit to your sibling.
If your sibling and you have significant resources than your sibling knowing about your 529 plan could reduce the possibilty of overfunding the 529 plan.s Some funds can be transferred to her Roth IRA- there currently is a $35,000 lifetime maximum transfer amount per beneficiary
I initially informed my son and set up 529 accounts in my grandchildren’s names. The grandchildren will be informed when they are older.