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I would like to put some money towards my grandchildrenís college savings, but Iím 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?
Yes. Just about every 529 plan permits you to take the funds back for yourself at any time and for any reason. Subject, of course, to tax and 10% penalty on the earnings portion. This flexibility should relieve any concerns you might otherwise have about "giving" your money away now. Other types of gifts (trusts, family partnerships, UGMA/UTMA accounts, etc.) are not revocable, making the 529 plan unique in this respect.
Even though your contributions to a 529 plan are revocable, those contributions are treated as completed gifts from you to the 529 account beneficiary, and the 529 account value is removed from your taxable estate.
- How can I select the right 529 plan if I donít 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 grandchildrenís college savings, but Iím 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 grandchildís 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?
- Iíve 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 grandchildrenís tuition and not even have to worry about the gift tax. So why should I use 529 plans?