Question 4: What if my child doesn’t go to college or gets a free-ride scholarship?
If the beneficiary of the ESA or 529 doesn’t use the money by age 30, you can change beneficiaries at any time and as often as you want. Siblings, parents, nieces, nephews pretty much anyone in the family is eligible.
If you decide to use the money for non-educational expenses, you’ll pay a 10% penalty plus income taxes on the distribution.
Good news… If your child’s expenses are covered by scholarships and you withdraw money for non-qualified purchases, the 10% penalty does not apply.
What’s your plan?