I’ve Saved Money in a 529 For My Child & That Child Decided That They Won’t go to College...

 
 

 

I’ve saved money in a 529 for my child and that child decided that they won’t go to college, is going into the military or got a scholarship.  What are my options for those saved dollars?

I’ve saved money in a 529 for my child and that child decided that they won’t go to college, is going into the military or got a scholarship.  What are my options for those saved dollars img.jpeg
  • You can change the beneficiary on a 529 account once per year.  You can make that beneficiary yourself, your spouse, or another family member.

  • If your child doesn’t go to college, you can withdraw all contributions you have made without tax or penalty.  If you withdraw the earnings, you will pay income taxes and a 10% penalty on those dollars.

  • You can avoid the 10% penalty for a few reasons including:

    • The beneficiary becomes incapacitated.

    • The beneficiary decides to go into the military, receives Veterans Assistance benefits - you can then withdraw the same amount as the beneficiary receives in the assistance in that calendar year.

    • The beneficiary gets a scholarship or attends a U.S. Military Academy.  If you are withdrawing funds because the beneficiary received a scholarship, you can withdraw the matching amount and not pay the penalty, but you will pay income tax on the earnings of the withdrawal.


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