Ted wrote:

- quote -

Unless your son is 15 (or the law changed while my back was
turned) he doesn't have 15 years. When the beneficiary of a
529 plan turns 30 the funds are distributed and the income
portion is taxable.

- quote -

It is possible for the creator of the 529 to change
beneficiaries. If you don't have grandchildren before your
son turns 30 that option is not available for the grandkids.

- quote -

That's what I would do.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Ted wrote:

- quote -

Well, it's even more than that. The 529 when used for
college is withdrawn tax free. If he takes it out the year
after he graduates, he has 10% penalty plus income tax. So
here's my suggestion. Use the 529 money as it's intended to
be used. Is he working at all? Summer job? Give him $4000/yr
to deposit into a Roth IRA. You can gift him 12K/yr (as can
the Mrs. so $24K total) or dole money over time. When he
graduates, you can gift him enough each year so he can max
out his 401k account without stuggling.

Whatever you do, it would be a shame to take the 529 and
lose the benefits that it had to bad timing of a withdrawal.

JOE

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I just got my first $45,000 bill for my son's college.

4 years ago I had doubts about my ability to pay for his
college, but it seemed unlikely he would qualify for a
scholarship. He had a significant amount of money given him
by his grandfather, which I put into a 529 (NYS) to pay for
his college. It has grown about 30% in that time. Now I am
feeling rather better about my finances, and would just as
soon pay. That would leave his 529 hanging.

My understanding is that if he used it to pay for a house 15
years from now he would owe income tax and a 10% penalty on
the profit. The IRA like protection seems good, but I am
not sure it is worth the 10% penalty. Are there any
exceptions to that? It seems a little too speculative to
have him save it for his children.

Should I just use the 529 and make it up to him in other
ways? Any advice would be appreciated.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >