You can even change the beneficiary to yourself.
So if you have other children in college now or who’re planning to attend college, you can simply make them the beneficiaries of the account. The flexibility that characterizes 529 plans includes the ability to name someone else as the account’s beneficiary. So what should you do if your child graduates from college and there are funds left in your 529 account? Here are a few options to consider:Ĭhange the beneficiary. Funds you’ve contributed to the account (or principal) won’t be taxed upon withdrawal regardless of what they’re used for, because contributions were made with after-tax dollars. Note that only the earnings portion of the account will be subject to taxes and penalties. Specifically, earnings on investments held in the account will be taxable and a 10% penalty will be assessed if the money is used for noneducation-related expenses. The tax consequences come into play if 529 funds are used for anything other than qualified education expenses. Further, some states offer tax incentives for contributions to 529s. Savings grow on a tax-deferred basis, and withdrawals are made tax-free if the money is used to pay for qualified education expenses such as college tuition, fees, books, and, generally, room and board. But if the money is held in a Section 529 college savings plan, there could be tax consequences to overfunding the account.ĥ29 plans are tax-advantaged accounts designed to help families save money for college education expenses. Some might consider it a good problem to have: saving too much money for college.
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