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How can I select the right 529 plan if I don’t know where my grandchildren will be attending college?
In the vast majority of 529 “savings” programs, that won’t matter. Withdrawals from the account can be used at any educational institution where federal student aid is available, whether or not the school is located in the state sponsoring the 529 plan. Eligible institutions include private colleges, public universities, community colleges, graduate schools, and trade schools around the country. Foreign schools may also be eligible. To check the eligibility of any particular institution, use our school code search tool.
The situation is different with many of the 529 “prepaid” programs. These 529 plans often reserve their best benefits for students attending particular institutions. For example, the College Illinois! prepaid tuition program is targeted to Illinois families who plan on sending their children to Illinois public institutions. Another example is Independent 529 Plan, a program that permits you to lock in tuition at participating private colleges around the country. In any 529 prepaid program, the benefits can be converted for use at non-targeted institutions, but you’ll want to understand the conversion formula before making the decision to join the plan.
- How can I select the right 529 plan if I don’t know where my grandchildren will be attending college?
- What happens if I have money in a 529 account for a grandchild who later decides to not attend college?
- I would like to put some money towards my grandchildren’s college savings, but I’m worried about unplanned medical expenses or other financial needs I may have later on. Can I get my money back out of a 529 plan?
- Which investment option in the 529 plan should I choose for my grandchild?
- We have 16 grandchildren below college age. Should we set up a separate 529 account for each of them, or can we combine the savings into just one account?
- Instead of opening my own 529 accounts, can I just make contributions to the 529 accounts my children have already established for my grandchildren?
- How do Coverdell education savings accounts compare to 529 plans?
- If I ever need to go to a nursing home and apply for Medicaid benefits, will the 529 accounts I have set up for my grandchildren be counted as part of my assets?
- What happens to my 529 plan if I die or become incapacitated?
- Am I hurting my grandchild’s eligibility for financial aid by putting money into a 529 plan for him?
- My tax adviser is recommending 529 plans as an estate-planning vehicle. What is the advantage?
- I’ve been making direct gifts to my grandchild each year into a custodial account (UTMA) with the understanding that those funds are to be used for college. Is there anything wrong with this approach?
- My estate planner tells me I can reduce my estate by paying my grandchildren’s tuition and not even have to worry about the gift tax. So why should I use 529 plans?