Full RideSport university scholarship/529 plan
For my grandson I have 529 Michigan $38,000 started in 2011; 529 Illinois plan $56,000 started 2015. His mother has $73,000 529 for him. He is only child of only child.. no one to pass plan to. He will graduate in 4 weeks and received full ride athletic scholarship. We can slowly transfer total $35, 000 into Roth for him. We are not wealthy (my last AGI $42,000) Is there any way to avoid 10% penalty for non-qualified withdraw.
Terry Says
This is a nice problem (for him) to have! First note — He must have EARNED INCOME in order to transfer up to $7,000 a year into a Roth IRA in his name. The maximum transfer is $35,000 todal of “leftover” funds.
And, of course, he might go on to graduate school — maybe law or business school?? The money could be used for that.
And there is a longer time horizon: the money could continue to grow for HIS kids eventual tuition!!
But if you need the money back there is no way for YOU to take it out without paying taxes on all the gains along the way, plus a 10% penalty.
