Originally appeared in Estate Planning, a Thomson Reuters publication. Copyright 2003 Thomson Reuters/Tax & Accounting.
Saving for college costs is a priority for many clients. The 2001 Tax Act made Section 529 plans more flexible. Tax-free rollover rules and tax-free transfers between plans were liberalized so that if the Section 529 plan balance cannot be used by the particular beneficiary for education costs, then the account owner can transfer the plan benefits to another beneficiary until the amounts are used appropriately. The definitions of family members and qualified higher education expenses were expanded. These substantial advantages have made Section 529 plans the “darling” of media articles on planning for children and college costs.
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