When families start saving for post-secondary education, one question often comes up: What if my child doesn’t use all the funds?
It’s a valid and common concern. The good news is that a NEST 529 Advisor College Savings Plan account is designed with flexibility in mind, giving families several options if plans change.
Education Plans Change
Today’s students are exploring more paths than ever. Some may choose a shorter training program, enter the workforce sooner, receive scholarships, or decide to continue their education later.
No matter the reason, not using all the funds doesn’t mean they go to waste. Instead, families can adjust and choose what works best for their situation.
Option 1: Keep the Funds for the Future
One option is to simply leave the funds in the NEST 529 Advisor account. There are no age restrictions or deadlines to use the funds, so the beneficiary can return to school later if their goals evolve.
Whether it’s pursuing an advanced degree, a certification, or additional training, the funds remain available when the time is right, at any age.
Option 2: Change the Beneficiary
If the original beneficiary no longer needs the funds, you can transfer the account to another eligible family member. This could be a sibling, cousin, or even yourself if you’re considering further education. This flexibility allows families to continue using their savings to support education within the family. See the NEST Advisor College Savings Plan Program Disclosure Statement for more details on changing the beneficiary.
Option 3: Take a Non-Qualified Withdrawal
Families also have the option to withdraw the funds for non-education purposes. In this case, it’s important to understand how withdrawals are treated.
The contributions you made can be withdrawn tax-free. However, the earnings portion may be subject to federal and state income taxes, as well as a 10% federal penalty tax. For Nebraska taxpayers, there may also be a recapture of any previously claimed state tax deductions.
Option 4: Rollover to a Roth IRA for the Beneficiary
In certain circumstances, you may rollover assets from a NEST 529 Advisor account to a Roth IRA account maintained for the benefit for the Beneficiary of the NEST 529 Advisor account. This is subject to certain limitations. Please review the NEST Advisor College Savings Plan Program Disclosure Statement and consult with a financial professional or tax advisor regarding your personal situation.
A Plan That Adapts
The future isn’t always predictable, and education paths don’t always follow a straight line. That’s why flexibility matters. A NEST 529 Advisor account helps families prepare for a variety of possibilities, offering options that can adjust as goals change over time.
Learn more about the features and benefits of a NEST 529 Advisor College Savings Plan account and other commonly asked questions.