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Originally Posted by Ben E Lou
Question about the various student loan debt forgiveness and free/heavily reduced college plans that may or may not come to pass before 2034ish, when I stop caring: what do these plans say about what happens to 529 accounts that could end up having "too much money" in them? Right now we're saving for "if y'all do in-state public and graduate in 4, you'll have no debt," so it wouldn't be an insignificant tax hit if there's not some sort of allowance for that. Any others with small children factoring that in?
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As things stand, I think the only "penalty" one can incur with unused 529 funds that are cashed it is a recapture of the tax benefits from having put the funds into the 529.
That said, if that should come to pass, you can in all probability find a way to use the remaining 529 funds. There's K-12 expenses, if change comes quickly; there's grad school, if that's an eventual path for your children; and there's the possibility for transferring beneficiaries. (You can change the account beneficiary to make the funds available for a grandchild, next of kin, whomever.)