How to Transfer Money Between 529 College-Savings Accounts

There is no limit to how much you can move or how often you can move funds between beneficiaries.

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I have multiple grandchildren, each with a 529 college-savings account. My oldest grandson is about to start college in the fall, and I’d like to transfer some money from another grandchild’s account into his. Can I switch money from one grandchild’s account to another, and are there any tax consequences or penalties?

You can change the beneficiary on the account from one eligible family member to another without penalties or taxes. Eligible family members are based on their relationship to the beneficiary and include the beneficiary’s spouse; child or stepchild; sibling or step-sibling; parent or stepparent; aunt or uncle; niece or nephew; son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; the spouse of any of those relatives; or a first cousin. See IRS Publication 970, Tax Benefits for Education, for the full list and more information.

The procedures vary by plan, but you should be able to move any amount of money from one beneficiary to another. For example, you could move 50% of the money from one grandchild’s account to another grandchild’s account, says Keith Bernhardt, vice president of retirement and college products for Fidelity. At Fidelity, you would fill out a beneficiary change form and include both account numbers (you’d need to open a new account if you didn’t already have one for the new beneficiary). If you request a partial rollover, you can specify how much money to move from each investment within the account. You can also specify where to invest the money in the new beneficiary’s account, if that’s different from the allocation instructions already on file for the account.

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There is no limit to how much you can transfer or how often you can transfer funds between beneficiaries, as long as the account balance is within the plan’s maximum contribution limits, says Charu Gross, head of Vanguard’s education savings group. Maximum contribution limits vary by plan but are between $235,000 and $370,000 in most states (a few are higher). You can compare each plan’s maximum contribution limits at

Don’t wait until the last minute before college bills are due to make the change. Contact the plan to discuss your options well before you’ll need the money, in case the paperwork takes longer than expected or you face unforeseen administrative requirements, says Brian Boswell, of

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.