Ask Larry

What Should We Do With My Daughter's Conserved Benefits?

I have deposited some Social Security Disability benefit funds into a MOST 529 Education Plan for my daughter. She turns 18 tomorrow and like the previous question to you, we received the conserved funds to be returned back to SSA letter. Since this education plan is only to be withdrawn for educational purposes (we have to pay the school directly), there is a huge penalty for withdrawing for non-educational items. Should this account be transferred directly into my daughter's name as payee and beneficiary to stop SSA from wanting those funds back? Her savings account has her name and my name as co-owner. Should I remove myself as co-owner? Should I send a letter to SSA explaining her funds are in her own account and that she will be living at home for her college years? Any advice would be much appreciated.

Hi. That's a tough question to answer. If I were you I'd start out by discussing the situation with Social Security (SSA). The following section of their operations manual says that SSA may permit a former payee to transfer conserved funds directly to a capable beneficiary rather than returning them to SSA if it serves the best interest of the beneficiary, and goes on to say that allowing such transfers are decided on a case-by-case basis:

Your description of your circumstances certainly indicates that a direct transfer would be in your daughter's best interest, and hopefully Social Security would agree.

Best, Jerry

Feb 18 2021 - 11:46am
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