College Savings Iowa

I dont have kids yet but I do remember Alabama having a similar plan starting in the early 90's. Now it is time to pay up the state has no money and many people got burned. Just saying that saving for a child's education is very very honorable but this type of investment could leave a parent with nothing at year 18. Of course I am sure people who invest in this plan are well aware of that.

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Originally Posted by BEACHBUM

I dont have kids yet but I do remember Alabama having a similar plan starting in the early 90's. Now it is time to pay up the state has no money and many people got burned. Just saying that saving for a child's education is very very honorable but this type of investment could leave a parent with nothing at year 18. Of course I am sure people who invest in this plan are well aware of that.

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It really has nothing to do with how well the state is doing. It is like having a your own savings account for college.

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It really has nothing to do with how well the state is doing. It is like having a your own savings account for college.

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oops! My fault. Just figured it was a similar investment

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Originally Posted by jamesfnb

You don't have to use the funds for an Iowa school. You can use them nationwide. If your kid gets a full scholarship you can transfer the funds to your other children or save it and transfer to your grandchildren down the road.

But, if you cash out and don't use it for college expenses you will get hit with a penalty. I wouldn't worry too much about that though. You could take out $2K for example, buy a laptop and say it's for school.

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To be clear, if your kid gets a scholarship, you can cash out of the 529 the value of the scholarship and the only "penalty" is having to pay income tax on the gain.

Scholarships and 529 Plans - Kiplinger.com

You are better off trying to find an educational expense to spend it on so you don't have to pay that tax, but there isn't a 10% penalty like there is if you withdraw for an unapproved reason.