{"id":9723,"date":"2024-03-06T16:55:32","date_gmt":"2024-03-06T21:55:32","guid":{"rendered":"https:\/\/mcswainhiott.com\/?p=9723"},"modified":"2024-03-24T15:25:33","modified_gmt":"2024-03-24T19:25:33","slug":"what-to-do-with-an-overfunded-529","status":"publish","type":"post","link":"https:\/\/mcswainhiott.com\/what-to-do-with-an-overfunded-529\/","title":{"rendered":"What to do With an Overfunded 529"},"content":{"rendered":"

\"\"Funding a 529 College Saving Plan is a great way to save for a child\u2019s college education and possibly get a state tax deduction depending on the state you live in.<\/span><\/p>\n

You can accumulate income-tax-free earnings with a Section 529 college savings plan account.\u00a0<\/span><\/p>\n

Then, you can take income-tax-free withdrawals to cover qualified education expenses, usually for college.\u00a0<\/span><\/p>\n

Great! But what if your designated account beneficiary gets scholarships and doesn\u2019t need all the money in the 529 or decides not to attend college?\u00a0<\/span><\/p>\n

What are your options, and what are the federal income tax consequences for those options?<\/span><\/p>\n

Exercise Patience\u00a0<\/b><\/p>\n

Your wavering account beneficiary may still decide to go to college after spending some time doing something else.\u00a0<\/span><\/p>\n

Unless the 529 plan restricts how long the account can remain open, you can leave the funds invested for years. The money will be there if your beneficiary decides to go to college later.\u00a0<\/span><\/p>\n

Change the Account Beneficiary\u00a0<\/b><\/p>\n

If you funded the 529 account with your own money, you are the account owner and can designate the account beneficiary.\u00a0<\/span><\/p>\n

As the account owner, you can also change the beneficiary.\u00a0<\/span><\/p>\n

You can change the beneficiary on a tax-free basis as long as the new beneficiary has one of the following family relationships with the original beneficiary:\u00a0<\/span><\/p>\n