Anything to be done with money leftover in a 529?

The unexpected upsurge in stock prices looks to be leaving me a surplus in a 529. Is there any way to access it other than paying a 10% penalty or saving it for "grandchildren"?

Reply to
Troubled
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If there was an unexpected upsurge, that will likely be offset in future years by an unexpected loss. Leave it where it is and let it ride, or in the end the account may end up with less than you planned.

This was the mistake that a lot of companies made with pension funds they held in the 1980's, when interest rates were very high. The funds held more than they actuarially needed, so the accounts were drained down to what they considered necessary. In subsequent years when interest rates were lower, the accounts ended up with less than they should have had.

Reply to
Stuart A. Bronstein

See page 59 in IRS Pub 970 for all the exceptions to the 10% penalty. Page 59 also explains how you can roll it over to another family members plan and avoid the tax and penalty.

Reply to
Alan

There is $100,000 in the 529. Expenses to graduation will be about $75,000. None of the exceptions or rollovers apply; I simply didn't expect the value to go up 100% so I over funded.

So there is nothing to do but leave it there for 30 years for grandchildren. Hmm.

Reply to
Troubled

Give your child $4,000 and have her pay for college tuition and fees (not from the 529) and she can claim the American Opportunity Tax Credit of $2,500. The taxes and penalties may be less than the $2,500 credit. Remember that the tax is on the gain, so not all of the $25,000 distribution will be subject to tax. (In order to allow the child to claim the AOT, you cannot claim her as a deduction....but for those with higher incomes, the deduction has no value anyway.)

Andy

Reply to
adwagner

Well, your child may decide to go to graduate school....

Reply to
taruss

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