What can I do with any remaining amount in the 529 plan I set aside for my grandson?

I saved enough for him to follow our family legacy and attend an Ivy League school, instead he went to a state school and didn't use all of the money in the 529.

Asked by Edna

3 Answers

Log in or sign up with email
By submitting you agree to our Terms of Service
Answered by Kim Miller, CFP®PRO+ in Redmond, WA
Hi -

1) He can use the funds for graduate school or 2) you can transfer the account to another family member - including yourself - for college. Lastly, you can cash the account out - any gain exceeding investment in the account will be taxed (on your tax return) and the gain will also be subject to a 10% penalty tax. Depending on the plan, you may have a number of years before you have to do anything - if there is the possibility your grandson will go on to graduate school (but isn't sure now) or you think you might have another grandchild to whom the account could be transferred, you could leave the account open and re-evaluate at a later date. Best of luck! | 10.09.13 @ 23:33
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 18:38
A
Answered by Albert
Great answer - a quick follow up question: if you were to transfer to another person, can it be any family member? Brother, nephew, cousin, spouse, etc?

If so, how do you prove the family relationship when you withdraw? | 10.10.13 @ 20:49
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 18:38
Answered by Kim Miller, CFP®PRO+ in Redmond, WA
The range of consanguinity (people to whom the beneficiary - the student - is related) is quite broad and includes: siblings, step-siblings, parents, ancestors of parents, step-parents, even first cousins. IRS Publication 970 has a complete list. The IRS guide on these plans does not mention any proof of relationship. Perhaps the 529 Plans are required to ask at the time of a change - I would check with the 529 Plan Administrator of your plan. Good luck! | 10.10.13 @ 22:40
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 18:38
Log in or sign up with email
By submitting you agree to our Terms of Service
Free MoneyTips Membership!

Get FREE, full access to MoneyTips.com

Answered by

Kim Miller
Kim Miller, CFP®PRO+ in Redmond, WA