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According to the College Savings Plans Network, just approximately 35% of Americans have heard of 529 plans. Only one out of every four of these schemes is linked to higher education savings. Participants may see the major benefit as tax-deferred savings and tax-free withdrawals for eligible higher education costs. In some states (check your state! ), state tax advantages such as tax deductions, credits, grants, or exemption from financial aid consideration from in-state colleges are available. However, college savings plans offer far more benefits than only tax advantages. Given the low public knowledge of 529 plans, it’s unlikely that the ordinary individual is aware of some of the more subtle benefits.
1) Qualifying Registered Apprenticeship Programs
For registered apprenticeship programs, you can make eligible withdrawals from a 529 plan. According to the US Department of Labor, there are over 24,000 apprenticeship programs around the country. The apprenticeships encompass a wide range of fields, including healthcare, engineering, and manufacturing, with an average yearly pay of $70,000 for those who finish the program.

The Bureau of Workers Statistics (BLS) predicts a rise in demand for skilled labor when the Baby Boomer generation retires… [+] getty, retire

2) Most International Schools Qualify
Over 400 schools outside the United States and its territories are qualified higher education institutions, which means you can use a 529 plan to pay for qualifying expenditures at such schools without paying taxes. Your recipient is still eligible for tax-free disbursements if he or she attends Oxford or the University of Toronto. The US Department of Education has a comprehensive list of nearly 6,000 institutions.
3) High School Gap Year and College Credit Classes
Some gap year programs, such as international and domestic gap year, outdoor education, study-abroad, wilderness survival, sustainable living trades, and art programs, have collaborated with higher education institutions to qualify for funding from 529 accounts. “These programs prepare you for life in a manner that college does not,” said Jason Stout of 529 Advantage.
ADDITIONAL INFORMATION FOR YOU
According to a recent Gap Year Association poll, program participants tend to do better once they start college, and alumni comment on their gap year experiences was overwhelmingly favorable, regardless of the program they picked.
In addition, many colleges are directly offering gap year programs. Between 90 and 130 students defer enrollment to Harvard College in order to take a gap year, which is encouraged by the institution. From Princeton to Tufts, several other institutions offer similar degrees, which differ greatly. “When you look at the end result, it’s that personal growth and confidence that allows the student to go to college and finish on time,” Stout said.

529 savings can be used for study abroad, adventure, and other gap year programs in some situations…. [+] Early polls reveal that students who participate in these programs have higher levels of happiness and academic success.
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Furthermore, if available, primary school kids over the age of 14 can use 529 savings to pay for college credit programs. These programs are available at Brown, Cornell, Georgetown, and many other universities, and may allow a student to graduate early.
4) Is Itn’t Being Used For College? Recover Your Funds
A non-qualified withdrawal from a 529 plan is usually subject to income tax plus a 10% penalty tax. However, if your beneficiary satisfies certain qualifications, you may be able to avoid the 10% penalty by switching from a tax-free to a tax-deferred plan. The beneficiary must……receive a tax-free scholarship or award in order for this to happen. In this instance, you can take a penalty-free withdrawal equivalent to the grant amount in the year the scholarship or grant is issued.
…graduated from a U.S. military academy….died or became handicapped. For eligible individuals, 529 assets may be rolled into a “ABLE” account….received aid through a qualifying employer-sponsored college savings program.

If you suspect you may be in one of these circumstances, you should get advice from a financial specialist.
You can still get your money back if none of these situations apply. 529 plans are legally revocable, which means you can cancel the gift and return the assets to the account owner’s estate. There are tax ramifications to doing so, including income tax and a ten percent penalty tax. However, 529 plans offer unusual versatility among investment vehicles for grandparents who seek the benefits of gifting without losing control of their assets in the event of unforeseen financial difficulties.
5) Qualified Private K-12 Tuition
Withdrawals from 529 plans can be utilized for up to $10,000 in tuition at private K-12 institutions. Computers, supplies, travel, and other non-qualified expenses are not eligible.

529 assets can be used to pay for up to $10,000 in tuition at private institutions like… [+] Phillips Exeter Academy, which is depicted above.
Getty Images/Boston Globe
6) Get Your Student Loans Paid Off
Many families take out student loans even though they have adequate funds because they are unsure whether their savings will be sufficient and they have qualified for aid. If you have money left over in your 529 account after graduation, you can use it to settle certain student loans up to $10,000.
7) They’re One Of The Most Effective Estate Planning Instruments
Contributions to a 529 plan are considered completed gifts to the beneficiary, and they can be “superfunded” for up to $75,000 per beneficiary in a single year, thereby using the yearly gift tax exemption for five years up front. For retirees with large RMDs (required minimum distributions) from eligible accounts like 401(k)s and traditional IRAs, the 529 plan provides high contribution limits across numerous beneficiaries while preserving ownership of the assets during the account owner’s lifetime. Upon death, assets also pass by contract, avoiding probate and estate tax.

529 plans are unique as an estate planning tool since they can transfer money in a tax-efficient manner while also ensuring that the funds help loved ones’ higher education objectives.
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Brian Boswell is a registered representative of MML Investors Services, LLC, which he represents and sells products via. SIPC member. 101 Federal St, Suite 800, Boston, MA 02110, www.sipc.org CRN202407-423285. Tel: 617-439-4389./nRead More

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