Funds now in 529 plans can pay for future education

Q: I would like to help fund my future grandchildren's educations with funds I've already set aside in 529 plans for my three kids. But I've heard that this will not be possible because funds in 529 plans are classified as nonqualified unless rolled over within 60 days. Is this true, and if it is, can you suggest any alternatives?

A: It is true, but you can still fund your grandchildren's educations using your children's 529 plans by changing the beneficiary from your child to your grandchild. The caveat is that the grandchild must already be alive. In other words, this is not like a trust that can be set up for future grandchildren. The good news is, the Internal Revenue Service has no age limit on how old someone can be to have a 529 plan, so your existing plans can be in your children's names until they have children of their own.

Send your money management questions to medec@advanstar.comAlso engage at http://www.twitter.com/MedEconomics and http://www.facebook.com/MedicalEconomics