How To Use Additional 529 Plan Cash – Forbes Advisor

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A 529 college savings plan is an investment account that families can use to save tax-free for a child’s education costs. States run these plans, and while you don’t have to use the plans your home state offers, you may get additional tax breaks for them.

If your child receives generous scholarships or chooses not to go to college, you may find that you have actually been diligently saving too much on a 529 plan by the time they reach college age. But since these plans are relatively strict regulate As for the way the money can be used, the ramifications for simply withdrawing the money can be dire to yourself.

If you spend 529 money on unqualified expenses, you’ll pay a 10% penalty and income tax on the portion of the payout that includes the investment income. However, there are many ways to withdraw the money for education costs and not impose a withdrawal penalty. Here are your options.

1. Understand what qualifies as qualified expenditure

First of all, make sure you know exactly what expenses you can pay for with 529 plan savings. This includes tuition, fees, housing, meals, a computer, equipment, and books, if necessary for the student’s coursework.

If the student lives off campus, 529 funds can only be used up to the school’s official room and board allowance, as calculated at the school Participation costs for financial aid purposes. You can find this number on the school’s financial assistance website.

If you use the money on unauthorized spending, only the amount of the withdrawal that has grown (or earned) as a result of your deposit is subject to taxes and penalties. You will not be penalized for withdrawing your own original contributions to the plan.

2. Make use of the scholarship payment rules

If you have an additional 529 plan funds because your child received a college scholarship, there is an exception to the penalty rules that are tailored for you. You don’t have to pay the 10% investment income penalty when withdrawing funds up to your child’s scholarship. However, you will have to pay income tax on the income.

This means that families are probably still worth saving on a 529 plan, despite the risk that their child could eventually get a scholarship. The plan provides a way for your money to grow even if it eventually becomes taxed on withdrawal, like money in a taxpayer Brokerage account.

3. Use the money for graduate school

There is no time frame in which you need to use the money you saved on a 529 plan. It can stay in the account for as long as you want, but it may need to be used for the beneficiary’s educational costs to avoid taxes and penalties.

If there is a good chance your child might participate Commercial college– For example, you would like to study medicine or pursue a subject that requires a master’s degree. – You can keep the 529 plan funds and plan for your child to withdraw them in the future.

4. Change the beneficiary to a family member

Alternatively, you can transfer the money to another family member. While 529 plans have very detailed payout rules, they also offer generous opportunities to let another family member take over the plan. This person can then use the remaining amount for their own education costs.

For example, if your child was the original beneficiary of the plan, you can change the beneficiary to a qualified family member. This includes all of their siblings, parents, first cousins, nieces, nephews, or even their own spouse or child. In practice, as a parent interested in graduate school, you could become the beneficiary of the plan and use the funds for your own education. Or you can leave them there for a future grandchild.

5. Pay the K-12 education costs

529 plans don’t just have to be used for college expenses. The IRS allows up to $ 10,000 529 plan funds to cover public, private or religious school fees and fees of the K-12 for the beneficiary. Make sure, however, that your state allows this type of withdrawal from its plan.

If allowed, you can transfer the 529 plan to another child who, for example, is attending a private school, e.g. B. the sibling or cousin of the original beneficiary. Or, you can leave the money on plan for a future grandchild so they can use the money for either K-12 tuition or college expenses.

6. Pay back student loans

Another withdrawal option is to use 529 plan deposits to repay student loans. Up to $ 10,000 in 529 Plan Funds can be used to repay the plan recipient’s student loans, and an additional $ 10,000 can be used to repay loans held by siblings of a beneficiary.

That means any money left over on the original beneficiary’s plan can be used to pay back a sibling’s student loan. Or a parent could switch beneficiaries to themselves and use the additional plan benefit of 529 to repay loans they took on to cover the education of another child – or their own.

Bottom line

The complexity of 529 plans can make withdrawing your money as difficult as sticking to your savings goals. However, because of the many exceptions to these rules, there are many creative ways you can use your money wisely.

Monitoring A Misplaced Or Stolen Cash Order – Forbes Advisor

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A money order is similar to a check, except that it is a guaranteed form of payment – unless it’s lost or stolen. If you’ve lost a money order that you’ve received or bought, your money isn’t necessarily gone.

There is some work that you need to do to keep track of your money order. If that doesn’t work, you may be able to cancel your money order instead. Read on to learn what steps you can take to track down a lost or stolen money order.

How to track a money order

When you’ve lost one Money order or you think it was stolen, the first thing to do is track it. You can track a money order by contacting the money order issuer. The steps to follow up on a lost money order vary depending on who originally issued it. Here’s how to track a money order through three popular money order issuers.

USPS

The United States Postal Service has been in the money order business for some time, offering domestic and international money orders. Domestic money orders are limited to $ 1,000 per single order. International money orders cost a maximum of $ 700 per single order.

You can see if a money order has been honored by checking the box USPS website. Hopefully you have saved the money order slip as it contains the information you need to keep track of the money order. To view the status of the money order, you will need to provide the following information:

  • Serial number
  • Post number
  • Dollar amount

If you would like a copy of a redeemed money order, you must complete and submit PS Form 6401, the official money order request. It can take up to 60 days for the USPS to investigate the status of a lost or stolen money order.

You can’t stop paying for a USPS money order, but you can have it replaced if it’s found lost or stolen. In this case, a replacement instruction will be issued. The USPS charges a processing fee of $ 6.25 to replace a lost or stolen money order.

Western Union

There are two ways to track a lost or stolen Western Union money order:

  1. Once you have the receipt, use the request form on the back to begin the process of tracking or replacing the money order. Submit the completed form and $ 15 processing fee to the address provided.
  2. If you don’t have the receipt, you’ll need to fill it out and submit it Western Union Money Order Application Form. There is a $ 30 processing fee and requests can take up to eight weeks to process. You can submit the form in three ways:
  • Fax: 1-720-864-0477
  • Email: RMO@westernunion.com
  • Mail: Western Union Financial Services, Inc., P.O. Box 7030 Englewood, CO 80155-7030

If the money order has already been cashed, Western Union will send you a photocopy of the cashed money order. If they check the money order and find that it has not been cashed, you will receive a refund.

MoneyGram

MoneyGram money orders are available at thousands of retail stores in the United States. You can also purchase a money order through the website or the mobile app. You can track a MoneyGram money order by completing the Online form or by phone at 1-800-542-3590. You will need to provide the money order amount and serial number. This is also how you are requesting a replacement instruction through MoneyGram.

Online inquiries are the cheapest and fastest way to get a replacement money order. The processing fee is $ 18. It usually takes seven working days or more to process.

You can also request a paper form using the automated phone line mentioned above. There is a $ 25 processing fee for paper inquiries. It may take 20 working days or more to process.

If the money order is cleared, you can obtain a photocopy of the cashed money order by visiting a participating MoneyGram retail location. Complete a MoneyGram Express payment and pay the $ 18 processing fee. You can also email a photocopy request, but the fee is $ 25 per request.

If your money order was purchased from a different issuer, there may be a different process for tracking and replacing money orders. Check with your money order issuer for details on how to proceed.

What if the money order has been cashed?

As mentioned above, most issuers can provide a photocopy of a money order if it has already been cashed. This won’t help you get your money back, but it can come in handy if you decide to file a fraud lawsuit. The money order issuer can refund your money if you can prove you were a victim of fraud.

How to protect yourself against money order fraud

Money orders are often used as part of Bank fraud. There are steps you can take to protect your money after you’ve bought or received a money order.

  1. Fill out the money order as soon as possible. Write the payee name and other information on the money order shortly after purchase.
  2. When you receive a money order, you can deposit or redeem it immediately. The less time it spends with you, the less likely it is to be lost.
  3. Always keep your receipt until you know that the payment has been received by the payee.
  4. Avoid leaving money orders in a Dropbox. Either hand it over to the payee or hand it in personally at your local post office.

Bottom line

Money orders are safer than cash, but there’s always a chance the money order could be lost or stolen. You also usually pay more fees for money orders than for other forms of payment. Do your best to protect your money order so you don’t have to track down lost or stolen money orders. These days there are more modern options too Sending money to people digital, which can be better than using a money order.