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Savings account or 529?
I'm expecting my first child soon, and my husband and I want to start saving for college asap. I know a 529 makes more sense - if our child does in fact go to college. But what if he eventually decides not to go and needs the money for something else. Can it only be used towards school?
Money saved in a 529 plan can only be used for education, unfortunately. Otherwise I believe you pay a tax penalty. However, you can change the beneficiary on the cash at any point (even to make yourself the beneficiary) to be used for school. The best thing about a 529 is that if you get a good plan, you can get some serious tax deductions while you watch your cash grow. You might not get as many goodies if you just start a standard savings plan (which might only get you, what 1% interest?).
A LOT can happen in 18 years, and it might be nice to have access to that cash in the event of a job loss, economic crisis, etc. Or you can just eat the loss and pay the tax penalty for taking out the cash for other purposes?