Tax consequences of liquidating 529
529 college savings plans are attractive vehicles that you should consider in your financial plan.
There are probably a half a dozen other questions that may come to mind in contemplating how to deal with 529 plans and divorce.
For this reason, the parent that retains the plan usually has those investments added to their portion of the marital estate.
A key issue for divorcing parents is that if you take funds from, or fully close the plan, to distribute part or all the funds to a spouse, a 10% penalty on growth will be assessed.
But depending on your net worth, there may also be important estate and gift tax benefits and implications, which should enter into your decision to use a 529 plan.
When a 529 account is opened, the owner selects a beneficiary who will receive the plan proceeds at a future date.
You can generally name anyone, including family members and friends.