QTP Contributions by Nonindividuals footnotes

¹ See, e.g., Hamilton, Plastic Handcuffs: Employer Provided Educational Benefits for Children, 95 Tax Notes 392 (4/15/02).

² See id., p. 393.

³ Assume a husband and wife (H and W) are owner-employees, both participating in a companys Sec. 529 program; neither has vested. They divorce, and H leaves the company before vesting. The business has two options to avoid income recognition. First, it could simply keep the QTP for the designated beneficiary; however, because there would be no deduction until vesting, this option is undesirable. Second, if W is still an employee, the funds could be transferred tax free within 60 days under Sec. 529(c)(3)(C)(i) to the QTP for W, as long as the designated beneficiary is either the same person or a member of the same family as Hs designated beneficiary.