I have college to pay for in 5 yrs and was also looking at the 529 plans. Did anyone else notice the glaring 10% penalty loophole or am I imagining this......
You make your child the beneficiary and (for my state) the maximum contribution is $239,000. If a person reached the max. chances are pretty good that there would be money left over so...... you change your beneficiary to another member of your immediate family......say your elderly parent who can then take a computer class, gardening, a foreign language, etc. and I'll quote from the 529 program description, "If the beneficiary dies or becomes disabled, you may cancel your Participant Agreement and receive the full balance of the account. The earnings portion of the distribution will be subject to federal income tax, but not the 10% penalty." And I assume from the ommission it would also be exempt from state tax.
