If you’ve used a 529 savings plan as part of your college funding strategy, it’s possible that you may end up having some unused 529 funds after your student finishes their degree! Whether that’s due to having saved more than they ended up needing, or because your student decided not to go to college.

You might find yourself wondering what to do with those unused 529 funds?

3 Things You Can Do With Unused 529 Funds

Transfer to another beneficiary

While it’s true that 529 plans can only have one active beneficiary, it’s possible to transfer the account to a new beneficiary. The new beneficiary needs to be a relative of the original beneficiary. This can sometimes include in-laws, stepfamily, and spouses. If your child chooses not to attend college, you can transfer the 529 to your grandchild.

Save for future educational use

Just because your beneficiary chooses not to attend a traditional 4-year college, doesn’t mean your 529 funds will go to waste. Starting in 2024, certain 529 plans can be rolled over into an IRA account (with limits). More than that, your beneficiary may choose to pursue other qualified educational purposes or pursue college at a later date.

Withdraw the funds

While this method will incur a 10% penalty, it is possible to simply withdraw the funds from your 529 plan account and then either reinvest them or use them for another purpose.

How to avoid unused 529 funds

Use a financial advisor

Talking with a financial advisor can help you develop a college savings plan that works with your unique needs and is well situated in your larger wealth management plan.

Consider your beneficiary 

Knowing where they may want to go to college and what the tuition rate is can help avoid overfunding your 529 plan. More than that, they may make the choice not to pursue a traditional educational path. You’ll want to consider this when choosing a college funding strategy.

Partner with a financial advisor to use your wealth strategically

Saving for college can feel complicated, but a strong relationship with your financial advisor can help. At FCS Private Wealth Management, we keep it simple and refined. You tell us what you want your money to do, and then we use our expertise to create a plan.

With decades of experience serving high and ultra-high-net-worth clients, our team has the wealth management solutions you’re looking for.

Reach out, let’s start the conversation.

 

Please consider the investment objectives, risks, charges and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.

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