All Ways to Spend the Leftovers of Your Child’s Savings 529

You were about to be a parent of the decade and saved enough in the 529 plan to pay for your child’s private college education. Imagine your surprise when a little bugger decides not to go to college at all (or goes to a much less expensive school). There is now a ton of money associated with a limited use investment vehicle, but luckily you still have options.



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Consider changing beneficiaries

You can change the 529 beneficiary to another family member, including your other children, yourself, cousins, parents, grandparents, aunts and uncles. Many 529 plans allow you to change plan beneficiaries once a year so you can pass on the love to other people in your family who want to graduate.

Pay expenses for preschool and postgraduate education

Form 529 can be used to cover other eligible education expenses through high school and after college. Up to $10,000 in tuition per beneficiary can be paid out of 529 for both public and private elementary, middle, and high schools. Other usage restrictions may apply. Even if someone in your family isn’t in college, you can start cashing out some of your 529 savings after you switch beneficiaries.

You can also use 529 funds to pay off student loans up to $10,000 per beneficiary, which can come in handy if you can change the beneficiary to someone who already has student loans.

Use for other types of post-secondary education

529 can be used to pay for more than the traditional four-year university education. It can also be used to cover two-year programs, trade and vocational schools, and even schools located outside of the US. use of the fund. You can check if a US school qualifies with the Saving for College online tool .

Remember what counts as education expenses

The 529 plan can be used for more than just tuition. It can also be used to pay for other qualifying expenses , including required fees, books, supplies, and computer-related expenses. For students who attend school at least part time, even room and board can be covered by the 529 plan.

Take cash as a last resort

Your money is not locked up forever if you can’t find a way to use it for any education expenses for someone in your family. However, you are subject to federal income tax and a 10% penalty on 529 income if you use 529 for improper expenses. (The contribution amount itself is not subject to income tax or penalty, as the contributions are made in after-tax dollars.

The only exception to paying the penalty is if the beneficiary receives a full college scholarship, although in this case you still have to pay income tax.


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