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Bailing out of the Independent 529 Plan

If an Independent 529 Plan beneficiary decides not to attend a participating private college using prepaid tuition, or doesn't gain admission to one, you can still use your contributions in the following ways:

Change beneficiaries with no loss of benefits.
Roll the funds into a state-sponsored 529 plan. You'll recoup your principal contributions plus or minus 2% per year, depending on the performance of the account investments. But you'll forfeit the value of your Independent 529 discounts.
Take a refund. But note that if you use the funds for qualified college expenses, you'll lose the tax benefits and discounts of the Independent 529. And if you use the funds for any other purpose, you'll owe an additional 10% penalty.

In short, Independent 529 funds aren't locked in forever, but if you withdraw them you may face some consequences.

Married with children?
Bypass and QTIP trusts can help you benefit your spouse and then your kids

The estate tax's impact is gradually decreasing until the tax is eliminated in 2010. So though it may seem that estate planning is no longer critical, that is not the case. And unless Congress passes further legislation, the estate tax will return with gusto in 2011. Even with the benefit of increased exemption amounts over the next five years, married couples may quickly meet the exemption limits if they own a home that has significantly appreciated, have life insurance policies whose proceeds will be includable in their estates at their deaths or have securities portfolios. This article explains how employing a few strategies, such as placing assets in a bypass trust or qualified terminable interest property (QTIP) trust, can help married couples reduce their taxable estates and pass more to their loved ones.

Use mortgage deductions to lighten your tax burden

Taxpayers who took advantage of record-low interest rates to refinance or buy a new home last year, or are thinking about doing so this year, might be eligible to deduct some of the loan costs. The article tells which costs a homeowner can potentially deduct, and how to do it.

Private prepaid college tuition plans can save a bundle

Governed by Section 529 of the U.S. tax code, college tuition prepayment plans let people lock in today's tuition prices for children attending college in the future. Before last year, tax-advantaged prepaid tuition plans were allowed only for public colleges and only states could sponsor them. But now there's at least one independent plan - a uniform, private-college version of the state-sponsored plans. The article shares details about how the plan works and the benefits of paying in advance for college tuition.

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