What happens to the money in a 529 plan if my child doesn't go to college?
Asked 2 years ago
Hi, I opened a 529 plan, thinking it would be the best investment for my child, but it seems less likely that they will be going to college as time draws near. What will happen to the money if the child decides not to study? Would we be able to transfer the money into a different account? Tia.
Monday, October 18, 2021
well, you could do well to try to convince the child the importance of a college education. if it still doesnt work, off the top of my head, i would suggest you talk with the firm you are operating the account under. probably operate a 529 account that offers investment opportunities in a very low risk environment(if i am not mistaken, a couple of these firms have portfolio packages) to build your 529 investment. when the time comes for you to withdraw, whatever return you get could make up for the 10% penalty and possibly the tax that may incur
Wednesday, October 20, 2021
It should be noted that assets in a 529 account are eligible for ANY type of higher education program. This can include apprenticeship programs and college alternatives.
So, your child's options are quite extensive and flexible.
Typically, any withdrawals from a 529 college savings plan that are not utilized for qualified educational expenses will be subjected to both taxes and a 10% penalty.
But here are some tips you can use to avoid experiencing penalties:
- Change the beneficiary to another family member.
- Use the money to pay off student loan debt.
- Make yourself the beneficiary and attend a course.
- Transfer the funds for K-12 education (supplies, post-curriculum activities, and more).
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