The future can’t be predicted. That’s why the flexibility of a 529 Plan is so important.
What if I need my 529 savings before my child goes to college?
You can take the savings out of The Education Plan any time and for any reason. However, if the money is not used to pay for qualified education expenses, earnings may be subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal tax penalty on earnings.
What if my child receives a loan or scholarship?
Loans and scholarships usually don’t cover all education costs. You can use your 529 savings to pay for qualified expenses that aren’t covered by other sources.
What if my child doesn’t go to college?
529 savings can be used at accredited technical and vocational schools too, so your child isn’t limited to a traditional four-year college.
If your child doesn’t use the 529 Plan savings, you have three options: you can keep the money in the account in case your child changes his or her mind in the future, change the account beneficiary or make a nonqualified withdrawal.
The “lifetime” of a 529 plan
- Open an account with with as little as $1
- Your money is invested based on the investment options you choose
- You continue to make regular contributions
- All contributions and earnings in your 529 account continue to be reinvested in the plan
- The savings in your 529 Plan grow over time
- When your child is ready for college, withdraw 529 plan savings to pay for qualified expenses