Latest / The College Savings Podcast with Fexingo: 529 Plans, Education Funding, and Student Costs
How to Handle a 529 Plan Rollover Penalty
We break down the specific mechanics of a non-qualified 529 withdrawal, focusing on the ten percent penalty and income tax implications. Using a hypothetical case of a student who doesn't attend college, we calculate the real after-tax cost of pulling funds early versus letting them sit. We also explore the 'same beneficiary' rollover rule that allows unlimited transfers to family members without triggering penalties, offering a practical safety net for parents who overfunded their plans.
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The skinny
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