529 Plans and SAs

Shaka

Member
Doing some research today on what we can do with the 529 plan for our DS and thought I would share this information with the forum. This is from www.savingforcollege.com

"What happens if you've been saving with a 529 plan?
While attending a service academy may be a tradition for some families, there are also parents who are surprised when their child expresses an interest in a military career. What happens if those families have been diligently saving for college with a 529 plan but now there is a good chance that they won’t need the money? There are actually a couple of options. First, if there is a younger sibling that is planning to attend college you can simply change the beneficiary of the account. If not, you can still withdraw the funds and avoid the 10% penalty tax, thanks to the Military Family Tax Relief Act of 2003 which provides that attendance at a U.S. military academy will be treated as a scholarship for purposes of non-qualified withdrawals from a 529 plan. However, like a scholarship, the earnings portion of the account will be taxable.

Similar to an athletic scholarship, thousands apply to military academies but only a select number are accepted. While you may have your heart set on your child attending West Point, saving with a 529 plan in the meantime might be a safe bet."
 
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