Section 529 college savings plans are a great way to help pay for a child’s or other family member’s college education.

Contributions are not federally tax-deductible (they are deductible in many states), but they grow federally tax-free and can be withdrawn tax-free to pay for higher education expenses (up to $10,000 can also be withdrawn tax-free to pay for K through 12 school tuition or to pay off school loans).

But what happens if you establish and fund a Section 529 college savings plan for a child, grandchild, or other family member and he or she doesn’t use all the money or decides not to go to college at all? What do you do with the money in an overfunded 529 plan?

If you withdraw the money and ... Log in to view full article.