Question 1

What if my child doesn’t go to college?

Accepted Answer

You can change the beneficiary to another family member, use it for other qualified education like trade school, or withdraw it with taxes and a penalty on earnings. Some new rollover options exist with limits.

Question 2

Do I have to use my own state’s 529 plan?

Accepted Answer

No, but your state may give a tax break only for its own plan. Compare fees and benefits.

Question 3

What is a 529 plan?

Accepted Answer

A tax-advantaged savings account for education. Earnings grow federal tax-free and withdrawals are tax-free for qualified education expenses.

Question 4

How much should I save for my child’s college?

Accepted Answer

Any amount helps. Starting small and early, with automatic deposits, matters more than a perfect number.

Question 5

Can grandparents contribute to a 529 plan?

Accepted Answer

Yes. Many plans let relatives contribute directly or through gift links.

Question 6

What happens to a 529 if my child doesn’t go to college?

Accepted Answer

You can change the beneficiary, use it for other qualified education, or withdraw it with taxes and a penalty on earnings. Limited rollover options also exist.

Question 7

Does a 529 plan affect financial aid?

Accepted Answer

A parent-owned 529 generally has a modest effect on federal financial aid. Rules can change, so check closer to college.

Question 8

Should I save for college or retirement first?

Accepted Answer

Many experts suggest prioritizing an emergency fund and retirement, especially an employer match, since students can borrow for school but you can’t borrow for retirement.

Common questions: Saving for college