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My ex husband put money for our children’s education in a 529 plan. The children are in college now and he refuses to use the money. Is there a way he can be required to pay for their tuition with this money? What happens to it if it is not used on their education?

529 Plan
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Patrick O'Hara , EA
I believe the only way you could compel your ex husband to release the 529 funds is through a court order. As far as if the 529 money is not used for the designated beneficiary, it can be re designated to another beneficiary or the money may be withdrawn and not used for education purposes. In the latter case, the earnings on the 529 would be taxed as ordinary income at the marginal rate and a 10% penalty assessed on the taxable portion of the distribution.
Leave a Comment 595 weeks ago

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Edward Bender
I agree with Mr. O'Hara here, but have further questions. When was the plan established? What does the establishment document state regarding who has the authorization for the disbursements? If the intent was to use these funds (and since they are in a 529 plan I can assume so) to pay for college, then the court, if the document doesn't give you permission on your own, can compel use of these funds for the purpose for which they were intended. In some of these plans I have seen, the beneficiary (the child attending college) has authority to use the funds for the intended purpose. See what the documents establishing the plan state.
Leave a Comment 593 weeks ago

 

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