Hold the 529
Janelle is calling because her daughter received a college scholarship. They didn't have to use her 529, and they don't know what to do with this money now. Dave recommends holding it for a while.
QUESTION: Janelle in Arkansas is calling because her daughter received a college scholarship. They didn’t have to use her 529, and they don’t know what to do with this money now. Dave recommends holding it for a while.
ANSWER: The only thing you can do is hold it until she’s 30—and I probably would just hold it for a while. Let’s see how life fleshes out here. You either transfer it to a sibling, she uses it for education, or you’re going to have tremendous penalties on it. It’s pretty well trapped. That’s the downside of the 529. It is going to be used for that person for their higher education. And for her to have absolutely no higher education bills is unusual. Some scholarship money, some support is one thing, but to have zero out of pocket to go to college is an unusual thing. Thank goodness, but it does present an interesting issue.