Hi, I read on a financial aid blog that it’s good to have a 529-plan distribution go to the “beneficiary” (student) because distributing to the “participant” (e.g. parent) leads to more audits and because distributing to the school leads to delays and lack of control over when the payment is processed.
However, Fidelity’s website says that even if they distribute to the beneficiary, the 1099-Q goes to the participant. Is this true? Wouldn’t it have to have the social security number of the beneficiary if that’s who gets the distribution?
We’re about to launch our first college student, so I have no experience with this, and would appreciate any BTDTs.
Maybe when Fidelity says “goes to” they mean mailed to the address of, because if the 529 distribution is made payable to the school or the beneficiary (as opposed to the account owner), the 1099-Q should have the beneficiary’s SSN on it.
Edited to add:
Found this on a Fidelity website:
If you send the payments either directly to the beneficiary or an eligible institution, the tax form (Form 1099-Q) is sent to the beneficiary. If the distribution is sent to you or another payee, you will receive the Form 1099-Q.
https://www.fidelity.com/customer-service/how-to-take-529-distributions
@BelknapPoint - Thank you! I was going from this:
“Beneficiaries will receive a Form 1099-Q if money is sent directly to the school. For all other withdrawals, the participant will be considered to have received the money and will be sent a Form 1099-Q. Additional documentation (college invoice, statement, receipts) may be required by the IRS to verify that such payments are qualified.”
from: https://www.fidelity.com/529-plans/faqs-paying-for-college
Doesn’t this seem directly in contradiction to the source you found??
Yup, there’s definitely a disconnect there. I’m pretty sure that the page you linked to is inaccurate.