Most people don’t find leftovers appealing. Congealed gravy and cold mashed potatoes often end up being thrown away.
Cold cash, however, leftover in a 529 college savings account, deserves attention. Your One Financial Services advisor is available to analyze your family’s situation and help you to review your options.
There are several reasons why you might find there is leftover money in a 529 college savings plan account.
Your student may have ended up attending a lower cost or in-state college than you had planned for. Or he/she may have been accepted at a U.S. military academy or directly joined the military. Perhaps your student won a scholarship or received educational assistance from an employer.
Should there be leftover money in a 529 plan, there is no need to take a distribution since there are no age or time limits on distributions. You can simply leave the money in the 529 plan where it will continue to earn money, even after the account reaches the aggregate contribution limit.
And should the student decide to return to or continue their education, a 529 plan can pay for graduate school or any continuing education. The plan is not designed just to attend an undergraduate school or to seek a degree…most higher education qualifies.
Should you wish to use the 529 plan to assist another member of your family, you can simply change the beneficiary to a relative of the current beneficiary. Relatives include brothers, sisters, parents, grandparents, aunts, uncles, cousins, nieces, nephews, children, descendants, and their spouses.
You can also rollover funds from your 529 plan to an already existing 529 plan of a sibling or relative’s plan or ABLE (disability) account.
If there is not another family member whose education would benefit from the 529 plan, remember, you don’t need to take a distribution since there are no age or time limits on distributions. You can leave the money in the 529 plan and perhaps choose to update the beneficiary to be the children, grandchildren, or other descendants of the original beneficiary, thus leaving a loving legacy for a future generation.
At One Financial Services, we think of our clients like family, and it is that relationship that provides your OFS advisor with the insight to help guide you through life’s important financial decisions.
Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.