If you have been saving for your child’s college education through a 529 plan, but they decide to go an alternate route, what can you do with those funds?
A 529 account is an investment account typically earmarked for college that offers tax benefits when used to pay for qualified education expenses for a designated beneficiary.
The time has come for college and the name beneficiary has decided to start a business or decided college isn’t for them. Now, what to do with those funds?
Well, you have the right to change beneficiaries to another family member — or even yourself. *Have you considered going back to school?* The family member must be a sibling, first cousin, grandparent, aunt or uncle. You should be allowed to change the beneficiaries once a year, so if your child changes their mind a few years later, you may be able to change the beneficiary back to them.
If ultimately you decide to use the money for something other than qualified education expenses, you will have to pay income taxes plus a 10% penalty on the earnings.
As parents we want the best for our children, and as we know — they have a mind of their own.
Rianka R. Dorsainvil, CFP®️ is the Co-Founder and Co-CEO of 2050 Wealth Partners a virtual, fee-only comprehensive financial planning firm dedicated to serving first-generation wealth-builders, entrepreneurs, and thriving professionals. Rianka also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.
As an award winning successful, millennial Certified Financial Planner professional, Rianka offers a unique perspective not only on the current state of the financial service industry, but on how to stay relevant in an ever-changing world.
Rianka serves as a member of CNBC’s Digital Financial Advisor Council and CFP Board’s Diversity Advisory Group, is a Forbes Personal Finance Contributor, and has been recognized for her accomplishments and leadership within the industry by leading publications and organizations such as Investment News’ inaugural 2017 Women to Watch Rising Star and Wealth Management’s Ten to Watch in 2018. She has been published in PBS NewsHour, Forbes, USA Today, Black Enterprise, CNBC, Women’s Health, and more.