Reply to If your kid doesn't spend their 529, what will you do with that money?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I think this depends a little on whether you have extra because you ended up able to cash flow some expenses (but can still withdraw from the 529 tax free) or whether you saved more than the total cost of all your expenses. [/quote]

OP here, if he picks one of the automatic scholarships, then the total cost, even if we provide all his spending money, will be less than the amount in his 529, by more than the $35K he can roll into a Roth.  [/quote]
I think the Money and Finances forum is a better place for this question, OP.[/quote]

I'm not asking what we're legally allowed to do.  I know that.  I'm really asking if people think of it as the kid's money, or as the parents' money, or as something else. Or is it something in between?

For example, if I think of it as my money that I was willing to give to him for college and no other purpose, then I could turn around and tell his brother he now has a bigger budget, or I could give it over the years as Christmas gifts to my nieces and nephews. Or I could fund my own Roth.  Or I could withdraw it, pay the penalty, and renovate my ktichen.

On the other hand, if we think of it as his money, then can he withdraw it, pay the penalty, and make a down payment on a house. Or he can withdraw it, pay the penalty, and become a ski bum.   Or he can save it for his kids, or his eventual spouse to go to college or grad school.  My financial advisor also says he could use it to purchase a car to get back and forth to campus and internships, and then he'd still have it after graduation.

Or [b]is there a middle ground where I say first we see if your sibling needs it, then the rest is yours. [/b] Or, we keep it in the 529 to be split between all the grandchildren I end up with.  Or you can withdraw it for a down payment, but not for skiing. [/quote]

This is getting more confusing by the post.  If there's a sibling coming up behind your son for whom you need to pay for college, then why would DS get to take all the money for himself in any view of the account?  Why would you prioritize his spending goals over your other kids' education?

Philosophically, I view it as my and my spouse's money, earmarked for education.  We will encourage our kids to make economically reasonable choices (i.e., no glorifying expensive schools for expenses' sake, but also not going to a crappy school that doesn't have the degree they want just to save 15%).  Once both kids are all the way through school, the remaining money will be assessed for whatever we think our most pressing needs are next.  If there's enough for Roths, then I'd fund them for each kid in equal amounts.  If there's some left, I'd let it ride for the next generation's education needs.  If something crazy happens in the market and there's $2M in there, I might pull out a big chunk, pay the penalty, and give each kid some down payment money.  But I wouldn't tell either kid "this is your money, you can spend it all as you see fit" because that's not my view of it at all.  My kids might have different amounts in their 529s just due to market conditions during their lifetime - but their "share" in my head is an equal portion of whatever we've saved, because the point is that we, as parents, are saving for our kids' college costs.  Not X amount for Larlo and Y amount for Larla and it's their own slush fund.[/quote]

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