If that’s the case, you have options:
- Stay invested. You can leave the money in the account in case the Beneficiary decides to attend school later. There's no age limit for using the money.
- Change the Beneficiary. You can change the Beneficiary on your account at any time, provided the new Beneficiary is an eligible family member of the original Beneficiary.
- Roll over to a ROTH IRA: If your account has been open for 15 or more years, you can roll the money over to the Beneficiary’s Roth IRA in a direct trustee to trustee transfer without incurring federal or Iowa tax penalties if the contributions and earnings you transfer have been in the account for more than five years.
- Withdraw the money for other uses. You can always access the money in your account, regardless of what happens with the Beneficiary. If you withdraw for a non-qualified use, federally you’ll be taxed on just the earnings portion of your balance, plus a 10% penalty on the earnings. If you are an Iowa taxpayer and take a non-qualified withdrawal, any deduction previously taken must be added back to Iowa taxable income.
Refer to the Program Description for important information about eligible family members, Roth IRA rollovers and non-qualified withdrawals.
