College Plans Gone Awry?

Physician's Money Digest, October15 2004, Volume 11, Issue 19

Good news:

If Junior heads for Malibu tobecome a professional surfer, whathappens to the money you've stashedin a 529 plan to send him to college?You can switch the bene-ficiary of the 529 plan without triggeringany tax consequences, as longas the new beneficiary is a member ofyour family in the same generation ora higher one. So you can transfer the529 funds to Junior's sister, or even toyourself or your spouse, in case one ofyou goes back to school for anadvanced degree. If there's no otherbeneficiary to be named, you cantake the money out of the account,but if the cash isn't used for collegeexpenses, you'll pay a 10% penalty ontop of any income tax you owe.