Q about non-custodial-owned 529 distributions

BelknapPoint
Tue, 04 Sep 2018 20:13:20 +0000

A 529 distribution from a noncustodial parent could be treated as student income in the federal methodology?

If by “federal methodology” you are referring to the way that the FAFSA EFC calculation is done, the answer is yes. The following is from the FAFSA instructions:

Money received, or paid on your behalf, also includes distributions to you (the student beneficiary) from a 529 plan that is owned by someone other than you or your parents (such as your grandparents, aunts, uncles, and non-custodial parents). You must include these distribution amounts in question 45j.

(emphasis added)