Dear Liz: We sent our four children to college. University savings is 529. All four have graduated from college, have good jobs, and have about $50,000 left over.
Would you suggest that we build it for our grandkids’ college in 20 or 30 years? In that time, the amount would have increased significantly and might even cover all of our grandkids’ college costs.
Answer: There are various options for the remaining 529 funds, including ultimately changing the beneficiary to a future grandchild. Since nothing has been born yet and may not be born for a while, you can leave the account alone and let it grow for the time being.
In addition to paying for qualified college education expenses, up to $10,000 of your 529 funds can be used annually to pay for private school tuition for kindergarten through 12th grade. Additionally, up to $10,000 per beneficiary can be used to pay off student loans.
If you decide to allocate funds for your grandchildren, you may need to consider the best way to divide the money. We may not know for a while how many grandchildren we will have. There’s a good chance your first grandchild will reach college age before your last grandchild is born.
Another option, new this year, is to use your remaining 529 funds to fund a Roth IRA for your children, who are the intended beneficiaries. If your account has been open for at least 15 years, you can roll over the same amount as your contribution limit each year (the limit is $7,000 in 2024). (Each beneficiary’s lifetime rollover limit is his $35,000.) This assumes the beneficiary has income at least equal to the rollover amount.
Liz Weston is a certified financial planner and personal finance columnist in the United States. Nerd wallet. Questions can be directed to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or by using the “Contact” form below. askweston.com.
