ANSWERS TO YOUR 529 PLAN QUESTIONS
Kiplinger's Personal Finance|December 2024
Thanks to recent policy changes, families have more options for what to do with money sitting in these tax-advantaged accounts.
MALLIKA MITRA
ANSWERS TO YOUR 529 PLAN QUESTIONS

WHEN a child is born, parents tend to adjust their budgets to account for diapers, baby food and child care— not necessarily for the cost of the child’s college education years down the road. But as the cost of higher education continues to rise, it’s more important than ever to start saving early and often.

Enter 529 college-savings plans, which since their creation in 1996 have helped families stash away money for higher education by offering tax-free withdrawals on qualified expenses, including tuition, housing, books and meal plans. Despite the benefits that come with 529 plans, some parents hesitate to save in them: Just 30% of families use a college-savings fund such as a 529 plan, according to the Education Data Initiative.

“A lot of people don’t save in 529s because they’re concerned about what happens if their kid doesn’t go to school,” says Michael Hunsberger, a certified financial planner and owner of Next Mission Financial Planning. “But there are options.”

Many of those options come in the form of new rules around how unused 529 funds can be put to work. If you have money in a 529 but your child no longer needs it for education, you may have questions about how to use the funds as well as about the recent rule changes. Here’s what you need to know.

My child graduated from college, but we still have unused funds in her 529 plan. Can we just withdraw that money?

When you withdraw money from a 529 for a qualified educational expense, that distribution isn’t subject to taxes or penalties. But if you withdraw the money for a nonqualified expense, you face both federal income taxes and a 10% penalty on the earnings portion of the distribution. You may pay state income tax, too, depending on where you live.

هذه القصة مأخوذة من طبعة December 2024 من Kiplinger's Personal Finance.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

هذه القصة مأخوذة من طبعة December 2024 من Kiplinger's Personal Finance.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

المزيد من القصص من KIPLINGER'S PERSONAL FINANCE مشاهدة الكل
FREE HELP FOR COLLEGEBOUND STUDENTS
Kiplinger's Personal Finance

FREE HELP FOR COLLEGEBOUND STUDENTS

This program’s mentors assist applicants as they fill out the FAFSA, write essays and more.

time-read
2 mins  |
December 2024
WHAT YOU SHOULD KNOW ABOUT SPOUSAL IRAS
Kiplinger's Personal Finance

WHAT YOU SHOULD KNOW ABOUT SPOUSAL IRAS

You typically need earned income to contribute to an individual retirement account, but a spousal IRA provides an important exception to this rule.

time-read
2 mins  |
December 2024
SELLING SHARES? HERE'S HOW TO MINIMIZE TAXES ON YOUR GAINS
Kiplinger's Personal Finance

SELLING SHARES? HERE'S HOW TO MINIMIZE TAXES ON YOUR GAINS

ET'S say you've been regularly buying shares in a booming tech company over the past few years, but now you want to start taking some of those profits, perhaps to rebalance your portfolio.

time-read
5 mins  |
December 2024
Strategies for Novice Investors
Kiplinger's Personal Finance

Strategies for Novice Investors

AS part of a lifes kills program for young, single mothers, I was asked to teach a class on how to get on top of your finances.

time-read
3 mins  |
December 2024
ANSWERS TO YOUR 529 PLAN QUESTIONS
Kiplinger's Personal Finance

ANSWERS TO YOUR 529 PLAN QUESTIONS

Thanks to recent policy changes, families have more options for what to do with money sitting in these tax-advantaged accounts.

time-read
6 mins  |
December 2024
Rate-Cut Winners and Losers
Kiplinger's Personal Finance

Rate-Cut Winners and Losers

NOW that the Federal Reserve has cracked the interest rate ice, the next development will be to separate winners from losers.

time-read
2 mins  |
December 2024
SHOULD YOU BUY THESE RED-HOT FUNDS?
Kiplinger's Personal Finance

SHOULD YOU BUY THESE RED-HOT FUNDS?

Covered-call ETFs are popular but come with plenty of caveats.

time-read
6 mins  |
December 2024
DIVIDEND STOCKS ARE READY TO REBOUND
Kiplinger's Personal Finance

DIVIDEND STOCKS ARE READY TO REBOUND

Our favorite dividend payers are poised to benefit as falling interest rates lure investors back.

time-read
10+ mins  |
December 2024
IS A 55+ COMMUNITY RIGHT FOR YOU?
Kiplinger's Personal Finance

IS A 55+ COMMUNITY RIGHT FOR YOU?

These age-restricted developments appeal to older adults seeking abundant amenities and an active lifestyle.

time-read
8 mins  |
December 2024
AT LONG LAST, RATES ARE DROPPING
Kiplinger's Personal Finance

AT LONG LAST, RATES ARE DROPPING

Consider these portfolio moves now that the Federal Reserve has cut its benchmark interest rate.

time-read
4 mins  |
December 2024