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A 529 plan is great for grad school, too (Script)
My 30-year-old son has just graduated with his undergraduate degree (finally). My question is this: Can I now start a 529 plan for his graduate degree? He is uncertain just when he will go. If he should not go, can I transfer the money for my grandson's education?
First of all, congratulations to your son (and to you) for successfully completing his undergraduate studies! If he is thinking about graduate school, and you wish to help pay for it, a 529 plan can be a great vehicle for tax-free savings. Since there are no age limits with 529 plans, it won’t matter how old your son is when he decides to go back to graduate school.
Most graduate schools do fit the definition of an eligible education institution for purposes of your 529 plan, and you can verify eligibility for any particular school by accessing the U.S. Department of Education's school code look-up at ed.gov and determining if the school is listed as having a "school code."
If your son changes his mind about grad school, the leftover funds in your 529 plan can be redirected to your grandson or other family member. You simply change the beneficiary on the account, or transfer a portion of the funds to another 529 plan with your grandson as beneficiary.
If you switch the account to a grandson, your son who was the original beneficiary may have to report a gift for gift-tax purposes depending on the value of the transfer. So be sure to look into that when the time comes to make that change.
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