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A newphew, a niece, and college

Chris Farrell Feb 19, 2010

Question: I have a nephew and a niece on the way. I am not sure if my brother is ok with the idea of opening a 529 plan. Can I open one under my name and give the money to my nephew and niece when they go to college. Can I transfer the money without any issues? What is the best way to find out information on 529 for not direct relatives or even for friends? Michael, Saint Paul, MN

Answer: I am concerned about the family dynamics, but to your question: Yes, you can set up 529s for your niece and your nephew. You would name them as beneficiaries. You do need their birth dates and their Social Security numbers. You do need to be aware of the gift tax restrictions since you’ll be making gifts to your niece and nephew. You can learn anything and everything about 529 plans–including establishing them for relatives–at

Another way to save for them is to open up on your own and in your name a savings account, mutual fund, or some other investment. You would regularly deposit some money into the account. You could then gift it to them when it comes time for college. Of course, you’ll pay Uncle Sam with this approach but you’re also answerable to no one, including your brother.

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