Generally, money market accounts aren't eligible. If your beneficiary receives a refund from an eligible educational institution for money paid for qualified higher education expenses, you may recontribute the refund to the account for which he or she is a beneficiary.
The money must be recontributed within 60 days after the date of the refund and can't exceed the refunded amount. Withdrawals can be requested online by logging onto your account, by phone, or by submitting a Withdrawal Request Form. Qualified higher education withdrawals for attendance at eligible educational institutions can be sent to:. Withdrawals for K tuition cannot be sent directly to the beneficiary or the educational institution.
We will only send withdrawals for K tuition to the account owner. Learn more about making withdrawals. Complete the Withdrawal Request Form. If your withdrawal request is received in good order on a business day when the New York Stock Exchange NYSE is open, and prior to its close generally 4 p. Withdrawals received in good order after the close of the NYSE, will receive the next business day's trade date. If you request the proceeds by check, they will typically be mailed to the recipient within three business days after the trade date.
Allow ten business days for the check to be received. If you request that the proceeds be sent to you electronically, you'll need to have banking information set up 15 days prior to making the request. Note: No matter how you receive the proceeds, allow extra time during periods of heavy volume, as crediting the student's account may be delayed. Also keep in mind that during periods of market volatility and at year-end, withdrawal requests may take up to five business days to process.
We'll generate a Form Q in January of the calendar year following a year in which there was a withdrawal from the account. The recipient of the Q will be either the account owner or the beneficiary, depending on who received the proceeds of the withdrawal. Withdrawals sent to the account owner will be reported under the account owner's Social Security number. Withdrawals sent to the beneficiary or to an educational institution will be reported under the beneficiary's Social Security number, per IRS guidelines.
You can change the beneficiary on your account at any time, provided that the new beneficiary is an eligible family member of the original beneficiary. An eligible family member is a:. You can also find this list of eligible family members in the Disclosure Booklet and Tuition Savings Agreement. Read the Disclosure Booklet. Stay invested. You can leave the money in the account in case the beneficiary decides to attend school later.
There's no age limit for using the money. Change the beneficiary. Refer to the list of eligible family members under the previous question, "Can I change the beneficiary? Withdraw the money for other uses. Exceptions to this penalty include a withdrawal made because the beneficiary:.
Has enrolled in an eligible U. Eligible academies include the U. Additionally, any accumulated earnings that are withdrawn from your account must also be reported on the recipient's income tax return for the year in which they're distributed, and you may owe federal, state, and local income taxes.
Are there other expenses for which I can use the money in my account? Normally, plan account owners can make only two investment changes per calendar year, but there is an exception when the investment change is requested with a beneficiary change. By Kathryn Flynn April 10, Can a plan have more than one beneficiary?
Recommended Articles. How to Increase Your Chances of Qualifying. A plan beneficiary can be changed to a qualifying member of the family of the current beneficiary at any time.
This flexibility may help families avoid paying taxes and penalties on unused plan funds and can be used as a strategy to avoid limitations around plan rollovers and investment options. If a child decides not to go to college or chooses to attend a less expensive college, they may end up with leftover funds in a plan. To avoid taxes and penalties, the parents can change the plan beneficiary to a qualifying family member of the beneficiary who will attend college. However, a plan can have only one designated beneficiary at a time.
In most cases it is best to have a separate plan for each child. Sometimes a child does not finish college, takes on a full-time job, or simply does not need all the assets in the college fund. The beneficiary flexibility allows parents to make changes over time. A account owner can change the beneficiary at any time without tax consequences if the new beneficiary is a member of the family.
A member of the family is defined in Internal Revenue Code section If the new beneficiary is not a member of the family, the change will be treated as a non-qualified distribution. In addition, the IRS may treat the change of beneficiary as a gift for the new beneficiary. If the new beneficiary is a member of the family, in the same generation or older, there is no penalty.
If the new beneficiary is part of a later, or younger, generation, the change may be treated as a gift for tax purposes. It is important to note that there are annual, lifetime, and five-year election exclusions for the purposes of gift taxes.
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