Gnucash and 529 plans

[Eric Siegerman]

Caveat: I'm not an accountant.

On Sat, Mar 24, 2018 at 07:21:31PM -0700, Steve Kelem wrote:
> How do I keep track of whether I've requested enough
> disbursements?

Presumably you have a GNC account for the 529 plan already,
reflecting its balance, earnings, etc.  Here's an approach that,
while requiring more transactions, seems to me to reflect what's
actually happening.

>    Ideally, when I pay for tuition, for example,
>     1. The funds go out of my checking account into the university

At this point, the 529 plan owes you money, even though they
don't know it yet.  So enter two transactions:

  - the obvious one: debit tuition expense, credit your bank
    account

  - but also: debit an "owed by 529 plan" asset account for
    yourself, and an "owing to Steve" liability account for your
    plan (I want to say "A/R" and "A/P" respectively, but in
    GnuCash those specific account types are reserved for the
    business functions, so one has to steer clear of them)

>     2. I need to make a disbursement request from my 529 plan

Make the request for the current balance of your "owed by 529
plan" asset account.

>     3. The disbursement gets deposited into my bank account.

Again, two transactions:
  - debit bank, credit 529-plan assets
  - debit 529-plan "owing", credit your "owed by plan"

Variations on the above for cases where you request the plan to
pay some expense directly -- which is why the disbursement
request is *not* for the current balance of the "owed by plan"
liability account.

  - Eric