Reply to Open two 529s for two kids?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Ok but still, what if one child does not pursue any schooling beyond highschool, has a serious illness or adverse event? Do you not worry about being able to access that money for other needs if you had to? I feel like I'm playing an odds game which hopefully turns out fine, but want to be realistic about all possibilities. [/quote]

You still get the money, they just recapture the tax benefit if it’s not used for qualified educational expenses. And maybe a small penalty? I’m not sure about that. But it’s not like the money is gone.  Your concerns are a bit odd, op. Just put in the amount to get the tax benefit and no extra then. [/quote]

The penalty is 10% plus paying taxes on the earnings[/quote]

You can change the beneficiary to a family member on the same "generation" of the family tree, so to speak, without taxes or fees.  So it could be spent on educational expenses for a cousin of your child, for example.

https://www.irs.gov/newsroom/529-plans-questions-and-answers

"Q. Can I change the beneficiary of a 529 plan I have set up?

A. Yes. There are no tax consequences if you change the designated beneficiary to another member of the family. Also, any funds distributed from a 529 plan are not taxable if rolled over to another plan for the benefit of the same beneficiary or for the benefit of a member of the beneficiary’s family. So, for example, you can roll funds from the 529 for one of your children into a sibling’s plan without penalty."[/quote]

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