Question

if a designated beneficiary caanot use funds in a section 529 plan the balance can be transferred.. the funds may be subject to gift tax if transferred to the

children

first cousins

parents

siblings

Answer 1

Answer: Children

Explanation:

There are no tax issues if the transfer is within the same generation or an older generation of the family, such as changing the beneficiary to a sibling of the original beneficiary. However, if the transfer is to a beneficiary in a younger generation, the transfer is considered a taxable gift from the old beneficiary to the new beneficiary, and a gift tax return will need to be filed.Therefore in the present situation option children would be correct as it is a younger generation.

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