<p>obsessed mom: My take on your question is that regardless of whose 529 account your children’s assets are in, they’re still parental assets and would be reported. So if you transfer assets of #2 and #3 children’s 529 accounts into child #1’s, child #1’s 529 account is reportable as a parental assets. If you did nothing and kept child #2’s and child #3’s accounts as 529s, they’re still reportable as parental asset.</p>
<p>From finaid.org regarding assets of other children (NOT 529s but other investments that a parent might make as a gift to the child):</p>
<p>“The assets of other children are not considered by the need analysis formula. So putting parent assets in the name of a younger (or older) sibling can help shelter them from the need analysis. On the other hand, when that child enrolls in college, his or her assets will be assessed at the usual rate for students… many schools now ask for the assets owned by the student’s siblings, so this strategy may affect the awarding of institutional funds.”</p>
<p>Once the asset is in the child’s name, it belongs to the child and can’t be “taken back” by the parent, although it can be spent to benefit the child as pointed out in posts above.</p>
<p>momfromme: taking money from a student fund (I’m assuming you mean a UTMA/UGMA account? or the student’s savings account?) and moving it to a parent’s account is typically not allowed by state law. Better to move it into a student-owned (custodial) 529 account because it will be completely ignored by FAFSA next year. For your DD’s last 2 years of college it will be assessed at the low 5.6% rate.</p>
<p>From savingforcollege.com:</p>
<p>“The 2006 law now prevents a 529 account from being treated as a student asset on a FAFSA filed by a dependent student. This means a custodial 529 will no longer be subject to the 20 percent assessment rate. In fact, it shouldn’t be included on the FAFSA at all. The transfer of UGMA/UTMA assets from taxable investments into a 529 plan can immediately produce much higher eligibility for federal financial aid. Even if Congress decides that this result was not intended, and enacts further changes to eliminate the “loophole,” the worst case is likely to be treatment of the student-owned 529 account as a parent asset. This would still produce a substantial benefit.”</p>
<p>NOTE: Congress CLOSED this loophole effective in 2009.</p>